Brazil:
Central Bank’s tightening cycle will cool economy further: Our Consensus is for GDP growth to be accelerating in sequential terms in Q1 2025; our panelists then see it easing slightly in Q2 2025 before stabilizing through Q4 2025.
Overall in 2025, the economy is seen growing at the slowest pace since the 2020 pandemic-induced downturn. Higher inflation and interest rates, coupled with softer wage growth, will hold back growth of private consumption and fixed investment. Extreme weather events are a downside risk to the outlook, while the government’s fiscal policy and its impact on inflation, investor sentiment and the currency is a key factor to monitor.