Brazil Growth Picks up as Expected

The Brazilian gross domestic product expanded by 0.1% from the previous quarter in the three months to September of 2025, slowing from the downwardly revised 0.3% growth rate in the second quarter, and missing market expectations of a 0.2% expansion. It was the slowest growth rate in two years, barring the 0.1% contraction from the fourth quarter of 2024. Private expenditure inched higher by 0.1%, reflecting some impact from stubborn inflation and the prolonged period of elevated real interest rates from the central bank. Meanwhile, government expenditure jumped 1.3%, while gross fixed capital formation jumped by 0.9%. In the meantime, exports rose by 3.3%, while imports rose a softer 0.3%.

The Brazilian gross domestic product expanded by 0.4% from the previous quarter in the three months to June of 2025, easing from the downwardly revised 1.3% in the earlier quarter, but marginally higher than market expectations of a 0.3% expansion. The expansion was led by household consumption (0.5% vs 1% in Q1 2025), extending the period of robust spending by individuals attributed to large fiscal support for households in earlier programs, which offset the high real interest rates by the central bank. In the meantime, government consumption contracted by 0.6% following an unchanged reading in Q1. In the meantime, exports rose by 0.7%, likely due to shipments of raw materials to the US as foreign companies front-loaded trade to avoid tariffs. Further, imports plunged by 2.9% to drive a strong support from net external demand to the GDP.

The Brazilian gross domestic product expanded by 1.4% from the previous quarter in the first three months of 2025, the most in three quarters, and in line with market expectations. The sharp growth magnitude was carried by a 3.1% expansion in gross fixed capital formation, despite the restrictive interest rates set by the Central Bank of Brazil as the monetary authority attempt to tackle above-target inflation and expansionary fiscal policy. In the meantime, private consumption grew by 1%, while public expenditures nearly stalled for a 0.1% increase. From the previous year, the Brazilian GDP expanded by 2.9% in the first quarter.