BRASILIA (Reuters) – Brazil’s Finance Ministry raised its economic growth forecast for this year to 3.2% on Friday, forecasting an acceleration from 2023, reflecting the resilience of Latin America’s largest economy.
The estimate from the ministry’s economic policy secretariat marks a sharp rise from the 2.5% estimate in July, incorporating both a positive surprise from second-quarter activity and expectations of stronger performance for the rest of the year, albeit at a slower pace.
In 2023, Brazil’s GDP grew by 2.9%.
The new forecast, which will serve as input for the government’s bimonthly income and expenditure report next week, is more optimistic than the 2.68% expansion forecast by private economists in the central bank’s weekly survey.
On Friday morning, a central bank index showed better-than-expected economic activity in July, continuing a string of solid readings supported by a strong labor market.
The scenario boosted bets that the central bank will begin a tightening cycle next week, raising interest rates by 25 basis points after holding them at 10.5% for two consecutive policy meetings.
The Finance Ministry also revised its inflation forecast for the year to 4.25% from 3.9% previously, coming close to the upper end of the official target of 3% with a tolerance band of 1.5 percentage points.
For 2025, the ministry’s economic policy secretariat slightly reduced the projected GDP growth from 2.6% to 2.5% and raised the expected inflation rate to 3.4% from the previous forecast of 3.3%.
