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Economists project Brazil's Gross Domestic Product (GDP) growth in 2025
A National Confederation of Industry (CNI) revealed new projections for the Brazil's GDP, indicating an expansion of 2,4% by 2025. This forecast is detailed in the report “Brazilian Economy 2024-2025” and occurs amidst a scenario of uncertainty, with challenges such as the rise in the Selic rate and the slowdown in investments.
3,5% growth for 2024
For 2024, CNI adjusted its GDP growth forecast to 3,5%, surpassing the 1,7% estimate released at the end of 2023.
The more optimistic projection reflects a series of factors driving the economy, including the good performance of the labor market and the significant increase in credit concessions.
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In 2024, consumption is expected to grow by 4,6%, with emphasis on the increase in retail sales and the growth in purchases of machinery and equipment.
The investment projection is also optimistic, with an increase of 7,3%, a direct reflection of the recovery of the industry and the continuity of the government's fiscal actions. The investment rate, therefore, will increase from 16,4% to 17,3%, according to CNI estimates.
GDP Expectation for 2025
However, the expectation for 2025 is 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 the reduction in the supply of credit.
Consumption is expected to slow, with growth of just 2,4%, half of the increase forecast for 2024. Industry is also expected to grow at a more modest pace, with an expansion of 2,1%.
The impact of the increase in the Selic rate, which reached 12,25% in December, will be one of the main factors slowing down economic activity. According to the CNI, the more restrictive monetary policy adopted by the Central Bank to control inflation tends to contain both consumption and investments.
Influence of the labor market and exchange rate
Among the factors that can still boost the economy, the CNI highlights the labor market, which should 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, should contribute to the slowdown.
Furthermore, the exchange rate scenario is also putting pressure on the economy. The devaluation of the real against the dollar could harm the trade balance, with exports growing by just 0,8% in 2024.
Imports, in turn, are expected to grow by 10,6%, which will reduce the trade balance. By 2025, with the reduction in growth in domestic demand, imports are expected to slow down.
Featured sectors
The agricultural sector, which underperformed in 2024, with a forecast decline of 2,7%, is expected to recover in 2025, with an estimated growth of 4,2%. The impact of adverse weather conditions, such as excessive rainfall and drought, was one of the factors responsible for this decline.
Brazilian industry projects growth of 3,3% in 2024, with the manufacturing industry standing out with 3,5%.
However, in 2025, the industrial sector is expected to grow more modestly, with an increase of 2,1%. The growth rate of exports, in turn, should improve slightly next year, driven by the recovery of agriculture.
Dollar Quote
The dollar exchange rate should also play an important role in the projections for 2025. The CNI predicts that the devaluation of the real will continue to negatively impact foreign trade, especially imports, which should register growth, but with a much lower intensity than in 2024.
This scenario affects the competitiveness of exports, although the increase in sales of agricultural products on the foreign market may bring some relief.
Furthermore, the dollar exchange rate can affect the production costs of companies that depend on imported inputs, such as machinery and equipment. This can have a domino effect on the price increases of manufactured products and other sectors, including services.
Prospects for the External Sector
For 2025, the CNI also projects an improvement in exports, especially due to the recovery of agriculture, which should have a positive performance after the decline in 2024.
However, the Brazilian trade balance is expected to continue facing difficulties, with a mixed performance in the external sectors, which will still depend on the dollar exchange rate and 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.
