Brazil GDP Grows More than Expected

The Brazilian GDP expanded by 1.1% in the first quarter of 2026, gaining traction following the upwardly revised 0.3% increase in the previous quarter and slightly ahead of the market consensus of a 1% rise. It was the sharpest growth rate in one year, remaining supported by the elevated level of government spending that has boosted household consumption in recent quarters and drove the Brazilian central bank to maintain interest rates at an elevated level. Household consumption jumped by 1% in the period, and public expenditure inched higher by 0.4%. Meanwhile, gross fixed capital formation surged by 3.5%. On the other hand, net foreign demand had a negative contribution to GDP growth, with exports rising by 1.7% while imports surged by 4.4%.

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%.