Brazil’s economic growth projected to decelerate to 2.2%

According to the World Bank, Brazil’s economic growth is projected to slow from 3.2% in 2024 to 2.2% in 2025, primarily due to a still-restrictive monetary policy. Inflation is expected to hover near the upper limit of the Central Bank’s target range in 2025.

The World Bank highlights that private consumer spending and a strong labor market will remain the primary drivers of Brazilian growth. However, according to the newly released Global Economic Prospects report, fiscal policy will likely have limited capacity to stimulate economic activity as the government prioritizes addressing urgent fiscal sustainability issues.

The report also warns of potential threats to Brazil’s growth, including fiscal instability, persistent inflation, tight monetary policies, and climate change impacts such as droughts caused by the La Niña phenomenon. Externally, China’s sluggish economic growth raises concerns over its potential to dampen global commodity demand, affecting Brazil’s export sector.

For Latin America and the Caribbean, the World Bank forecasts subdued growth rates of 2.2% in 2024 and 2.5% in 2025, a 0.2 percentage-point downgrade from the June report due to declining consumer spending levels.

“Latin America and the Caribbean are expected to rebound in 2025 and 2026, supported by declining inflation and more accommodative monetary policies. Both domestic and international factors, including commodity prices and rising global demand, will play a significant role,” the report states.

Translation: Todd Harkin

Source: Valor International

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