Brazil GDP

Economic growth ebbs in the second quarter of 2026

Q2 outturn slightly above expectations, but still ebbs: Brazil's GDP expanded 0.5% in seasonally adjusted quarter-on-quarter terms in Q2, following a 1.1% expansion in the prior quarter. Q2’s print marginally beat market expectations but slightly undershot the prior five-year average, as the economy expanded at less than half of Q1’s pace. High interest rates constrained private spending and fixed investment. Moreover, net exports fell. Still, fiscal spending in the run-up to the October presidential elections propped up public consumption and likely helped to cushion the impact of higher energy prices on household budgets amid the Iran war. Inventory builds added further support. In annual terms, the economy grew 2.0% in Q2, following a 1.8% expansion in the prior quarter.

Restrictive monetary policy weighs on domestic demand: Relative to the previous quarter's data, figures in Q2 worsened for private consumption (-0.4% on a seasonally adjusted quarter-on-quarter basis vs +0.8% in Q1), fixed investment (+1.2% vs +3.4% in Q1) and imports of goods and services (+1.8% vs +4.2% in Q1). In contrast, the reading for exports of goods and services improved in Q2 (-0.8% vs -2.1% in Q1). Finally, the variation in government consumption was the same as in the prior quarter (+0.4% in Q2 and Q1).

Economic growth seen weakening by end-2026: Our Consensus is for sequential GDP growth to slow through the end of 2026. Still-tight monetary policy—with real interest rates among the highest in the world—aimed at curbing inflationary pressures will likely weigh on the economy, alongside high inflation and deteriorating consumer and business sentiment. Risks to exports are also rising, as tougher European standards could restrict Brazilian beef shipments, disrupting established trade flows and potentially forcing exporters to redirect volumes to lower-value markets.

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Brazilian GDP projections for the next ten years from a panel of 59 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable GDP forecast available for Brazilian GDP.

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