Brazil's government has maintained its economic growth forecast for this year at 2.3%, while slightly increasing its inflation estimate due to marginal adjustments in its base case scenario.
The finance ministry's economic policy secretariat reported that gross domestic product growth in Latin America's largest economy is expected to slow in the second half of the year following an expansion in the first quarter.
This update coincides with the central bank's aggressive monetary tightening cycle aimed at curbing inflation, as policymakers are set to implement a third consecutive 100-basis-point interest rate hike to 14.25%.
The government has adjusted its inflation estimate for the year to 4.9%, up from the previous forecast of 4.8%. It anticipates that while food prices will moderate by year-end, costs of industrial goods are expected to rise.
The report notes that rising protectionism is likely to exert upward pressure on inflation, citing the tariff policies of U.S. President Donald Trump. However, this impact may be offset by the adverse effects of increased uncertainty on economic activity.
Additionally, the finance ministry provided initial forecasts for 2026, predicting that next year's growth would reach 2.5% and inflation would decrease to 3.5%. The forecast for growth near 2.5% is expected to persist in the following years, with inflation anticipated to align with the central bank's 3% target starting in 2027.