Previous projection was a 1.9% increase in the year; According to the monetary authority, families consumption should rise 2.1%
(Central Bank) increased to 2.1% the estimate for GDP growth (Gross Domestic Product) of 2025. The new projection is in the monetary policy report, the 2nd document released by the monetary authority this year. This is the document (PDF – 4 MB).
The Central Bank said that, even with the upward review, it maintains the expectation of slowdown in economic activity throughout the current quarter and the 2nd semester of 2025.
The Brazilian economy before the 4th quarter of 2024. The monetary authority evaluates that economic discourse is a “”For inflation to converge to the goal.
The Central Bank said the slowdown is expected because of maintaining a restrictive monetary policy. The Copom (Monetary Policy Committee) rose to 15% per year the basic rate, Selic. The base interest is on.
Other elements should contribute to the slowdown of economic activity, according to the BC. They are:
- Reduced degree of idleness of production factors;
- Perspective of global growth moderation;
- Reduction of the impulse of agriculture recorded in the 1st quarter.
Sectoral GDP
The agriculture was up 12.2% in the first quarter compared to the 4th quarter of 2024, which contributed to the discharge of GDP in the period. The Central Bank increased from 6.5% to 8.0% the projection for industry growth in the year.
According to the monetary authority, the reason is the review of IBGE (Brazilian Institute of Geography and Statistics) estimates for agricultural production, especially the increases in grain and coffee crop predictions.
The service sector is the one that most impacts Brazil’s GDP. The Central Bank increased from 1.5% to 1.8% the projection for industry growth. Said there was “positive surprises”In the 1st quarter data, with the performance of the group“Other services”, Which covers activities aimed at families, such as accommodation and food outside the home.
In industry, growth projection fell from 2.2% to 1.9%. The Central Bank evaluates that there will be a worsening of the transformation industry’s performance. The estimate for the increase of the activity went from 1.5% to 1.0%.
CREDIT
The Central Bank said the recent changes in payroll loans – with the creation of the worker’s credit – must have “some impact”About consumption and GDP.
The monetary authority said that the concessions of payable credit to private sector workers have increased with the new rules, but still have “Limited impact on the total concessions to families”.
The Central Bank increased from 1.5% to 2.1% the projection for family consumption by 2025. The estimate for the FBCF (gross fixed capital formation) increased from 2.0% to 2.8%.
Monetary Policy Report
The monetary policy report replaces the quarterly inflation report. In practice, it has the same information, but the change was a requirement of CMN (National Monetary Council), which changed the rules to measure Brazil’s inflation target.
CMN in June 2024 creates a continuous inflation target by 3%. This level is valid for at least 36 months, or until mid -2027. The tolerance interval has been kept at 1.5 percentage points and the margin will remain 1.5% to 4.5%.
By the new rule, which is valid since 2025, it will be considered a breach of the decree if annualized inflation is more than 6 months above or below the range allowed by the goal. By 2024, the inflation target was evaluated annually with the accumulated result from 12 months to December.
With the new rule, the Central Bank will disclose until the last day of each quarter the monetary policy report. The goal is to show the performance of the inflation target system, the results of past monetary policy decisions and the prospective evaluation of inflation.
The BC will also have to publish the reasons for any breach of inflation target. It will be made by note in the monetary policy report and in an open letter to the Ministry of Finance.
This document should have:
- the detailed description of the causes of non -compliance;
- the necessary measures to ensure the return of inflation to the established limits;
- the expected deadline for measures to have effect.
The Central Bank shall publish a 2nd letter if inflation does not return to the tolerance interval of the goal within the period stipulated in the note and the letter. The monetary authority should also disclose another document if it considers it necessary “Update the expected measures or deadline for the return of inflation to the tolerance interval of the settled goal”.
