In 2024, Brazil’s economy grew by 3.4%, the strongest since the pandemic rebound, yet showed slower momentum in the fourth quarter with only 0.2% growth. Economists forecast a decline in GDP growth to 2% for 2025 due to aggressive monetary policies aimed at controlling inflation, which surpassed the target.
Brazil experienced a 3.4% economic growth in 2024, marking the strongest performance since the post-pandemic recovery. This expansion exceeded market expectations due to significant investments and household consumption driven by government policies aimed at enhancing disposable income. The growth rate improved from 3.2% in 2023 and is the highest since 2021’s 4.8% growth.
Despite this positive overall growth, the final quarter of 2024 revealed a slowdown, with the economy expanding by just 0.2% compared to the third quarter. This result fell short of the anticipated 0.5% according to a Reuters poll. The fourth quarter also recorded an annual growth of 3.6%, which was below the expected 4.1%.
Looking ahead, economists project a further deceleration, forecasting GDP growth at 2% for the year, while the government anticipates a slightly higher rate of 2.3%. This expected slowdown is attributed to the central bank’s stringent monetary policy aimed at curbing inflation, which ended 2024 at 4.8%, surpassing the official target of 3%.
Since September, the central bank raised interest rates by 275 basis points to 13.25% and is expected to implement an additional 100 basis point increase to manage inflationary pressures, although a robust labor market and fiscal policy continue to support consumption and demand.
The reported economic indicators suggest a concerning trend as Brazil’s economic growth appears to be losing momentum, with substantial measures being taken to rein in inflation and stabilize the economy under the current administration.
Brazil’s economy grew by 3.4% in 2024, showing resilience amid market expectations. However, the fourth quarter revealed signs of slowing growth with a modest expansion of 0.2%. Factors contributing to this deceleration include aggressive monetary tightening by the central bank, aimed at controlling inflation, which ended above the target. Economists project a continued slowdown for the upcoming year.
Original Source: www.marketscreener.com
