Brazil’s Finance Ministry has updated its projections for the country’s economic performance. The ministry has raised its forecast for GDP growth in 2024 to 2.5 percent, up from the previous estimate of 2.2 percent made in March.Â
However, the ministry has also increased its inflation forecasts for 2024 and 2025. The projected inflation rate for 2024 has been revised upwards to 3.70 percent from 3.50 percent, while the 2025 forecast has been raised to 3.2 percent from 3.1 percent.
The ministry cited several factors behind the upward revision to the growth outlook, including robust growth in retail sales, increased job creation, and expanded credit access. But the inflation forecasts in Brazil reflect the impacts of recent severe floods in the Rio Grande do Sul state, which the ministry says will drive up prices of certain food items like rice, meat and poultry over the next couple of months.
The government also indicated that it now expects fewer interest rate cuts and a higher terminal interest rate compared to previous projections. The central bank has already slowed the pace of its rate cuts, reducing them by 25 basis points last week after a series of 50-basis-point cuts.
The ministry’s economic projections are more optimistic than the consensus forecasts from private sector economists surveyed by Brazil’s central bank. Those economists expect Brazil’s GDP growth of 2.09 percent in 2024 and 2 percent in 2025, with inflation reaching 3.76 percent in 2024 and 3.66 percent in 2025.
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