Brazil GDP Grows Less than Expected

The Brazilian gross domestic product inched higher by 0.1% from the previous quarter in the final three months of 2025, aligned with market expectations, following the downwardly revised stall in the earlier period. Private consumption stalled, consolidating the ongoing slowdown in the Brazilian economy since the second quarter of the year, aligning with the likely resumption of the Brazilian central bank's rate cuts. This was combined with a 3.5% slump in gross fixed capital formation, signaling that the period of restrictive rates by the BCB dented investment levels. In turn, these were offset by a 1% increase in government expenditure. Meanwhile, net foreign demand contributed positively to the GDP growth as exports rose 3.7%, while imports dropped by 1.8%.

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.