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Economists Project Brazil’s Gross Domestic Product (GDP) Growth in 2025
The National Confederation of Industry (CNI) revealed new projections for Brazil’s GDP, pointing to an expansion of 2.4% for 2025. This forecast is detailed in the report “Brazilian Economy 2024-2025” and occurs amid a scenario of uncertainties, with challenges such as high Selic rates and a slowdown in investments.
Growth of 3.5% for 2024
For the year 2024, the CNI adjusted its GDP growth forecast to 3.5%, exceeding the estimate of 1.7% released at the end of 2023.
The more optimistic projection reflects a series of factors driving the economy, including the strong performance of the labor market and a significant increase in credit concessions.
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In 2024, consumption is expected to grow by 4.6%, with a focus on the increase in retail sales and growth in the purchases of machinery and equipment.
The investment forecast is also optimistic, with a rise of 7.3%, a direct reflection of the recovery of industry and the continuation of fiscal actions by the government. The investment rate, therefore, will rise from 16.4% to 17.3%, according to CNI estimates.
GDP Expectations for 2025
However, the expectation for 2025 is for a slowdown. GDP growth will be 2.4%, reflecting a reduction in the pace of expansion due to the combination of factors such as monetary tightening and a decrease in the supply of credit.
Consumption is expected to slow down, with only 2.4% growth, half the increase projected for 2024. Industry is also expected to grow at a more modest pace, with an expansion of 2.1%.
The impact of the high Selic rate, which reached 12.25% in December, will be one of the main factors restraining economic activity. According to the CNI, the more restrictive monetary policy adopted by the Central Bank to control inflation tends to curb both consumption and investments.
Influence of the Labor Market and Exchange Rate
Among the factors that can still drive the economy, the CNI highlights the labor market, which is expected to generate more than 1.5 million new formal jobs by the end of 2024. However, the slower evolution of this market in 2025, after three consecutive years of growth, is expected to contribute to the slowdown.
Additionally, the exchange rate scenario also exerts pressure on the economy. The depreciation of the real against the dollar may harm the trade balance, with only 0.8% growth in exports in 2024.
Imports, in turn, are expected to grow by 10.6%, which will reduce the trade balance surplus. For 2025, with the reduction in domestic demand growth, imports are expected to slow down.
Highlighted Sectors
The agricultural sector, which underperformed in 2024, with a projected decline of 2.7%, is expected to recover in 2025, with estimated growth of 4.2%. The impact of adverse climatic conditions, such as excessive rains and drought, was one of the factors responsible for this decline.
The Brazilian industry, on the other hand, projects growth of 3.3% in 2024, with the manufacturing sector standing out with 3.5%.
However, in 2025, the expectation is that the industrial sector will grow more modestly, with an increase of 2.1%. The growth rate of exports, in turn, is expected to improve a bit in the coming year, driven by the recovery of agriculture.
Dollar Exchange Rate
The dollar exchange rate is also expected to play an important role in the projections for 2025. The CNI predicts that the depreciation of the real will continue to negatively impact foreign trade, especially imports, which are expected to grow but with intensity far lower than in 2024.
This scenario affects the competitiveness of exports, although the increase in sales of agricultural products in the external market may provide some relief.
Furthermore, the dollar exchange rate may affect the production costs of companies that rely on imported inputs, such as machinery and equipment. This could create a domino effect on the price increases of industrial products and in other sectors, including services.
Outlook for the External Sector
For 2025, the CNI also projects an improvement in exports, especially due to the recovery of agriculture, which should perform positively after the decline in 2024.
However, the Brazilian trade balance is expected to continue facing difficulties, with mixed performance in external sectors, which will still depend on the dollar exchange rate and international economic policies international.
Despite the challenges, the Brazilian economy is expected to grow moderately in the coming years, with the dollar exchange rate and other external factors playing a crucial role in this scenario.
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