Brazil Annual GDP Growth Falls to 3-Year Low

The Brazilian gross domestic product expanded by 1.8% from the previous year during the third quarter of 2025, slowing from the upwardly revised 2.4% growth rate in the previous year. It marked the softest expansion in over three years, reflecting the impact of the prolonged period of high interest rates by the central bank, among the highest in the world on a real basis, as large fiscal expenditure and stubborn inflation maintain a hot labor market. Output of agricultural goods soared by 10.1% and industrial output rose by 1.7%, while services grew by a softer 1.3%.

The Brazilian gross domestic product expanded by 2.2% from the previous year during the second quarter of 2025, slowing from the 2.9% expansion in the previous period and loosely aligned with market expectations. The data reflected the softest growth rate in over three years, indicating an increasing impact of high interest rates from the central bank, among the highest in the world on a real basis, as stubborn inflation continued to dent purchasing power. The output and generation of utilities contracted by 4% from the previous year, while manufacturing stalled. Conversely, the agriculture and livestock output surged by 10.1%.

Brazil’s economy expanded by 2.9% year-on-year in Q1 2025, down from 3.6% in the previous quarter and below market expectations of 3.2%. Growth slowed in construction (3.4% vs 5.1%), services (2.1% vs 4.7%), the public sector (0.5% vs 1.7%), and industry (2.4% vs 2.5%). In contrast, agriculture rebounded sharply (10.2% vs -1.5%) after a year of declines, while utilities also recovered (1.6% vs -3.5%). On the demand side, household consumption decelerated (2.6% vs 3.7%), as did government spending (1.1% vs 1.2%) and fixed investment (9.1% vs 9.4%). Regarding net trade, exports advanced 1.2% (vs. -0.7% in Q4), while imports grew 14% percent (vs 16% in Q4).