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In 2024, Brazil will surprise with GDP growth, but 2025 brings an uncertain future. Lula's government will have to make crucial fiscal adjustments to ensure that the economy does not go downhill. What awaits us in the coming months? Projections of an economic slowdown are worrying, and the country needs to react now to avoid a crisis.
Brazil has experienced a surprising 2024, with better-than-expected economic results. After a series of challenges faced in previous years, the country's economy appears to be back on the path to recovery.
However, the robust growth observed so far does not eliminate the fiscal and monetary challenges that still loom over the country's future.
According to data released by the Brazilian Institute of Geography and Statistics (IBGE) and economic analysis sources, the Gross Domestic Product (GDP) grew 0,9% in the third quarter of this year.
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The cumulative growth to date is 3,3, exceeding the expectations of many analysts. However, there is great concern about the year 2025, and the Brazilian government will need to make crucial strategic decisions to ensure that the economic recovery is not interrupted.
Challenges and Expectations for Growth
According to the International Monetary Fund (IMF), Brazil's GDP growth in 2024 has been revised to 3%, a significant increase from the previous forecast of 2,1%.
The IMF highlighted that this superior performance was driven by the strong labor market, controlled inflation and government resource transfers, such as social assistance programs, which have been fundamental to sustaining household consumption.
However, the robust growth scenario may be short-lived. The high interest rate, currently at 11,75%, and the reduction in fiscal stimulus are expected to slow the economy in 2025.
The federal government, under the leadership of President Luiz Inácio Lula da Silva, has adopted an expansive fiscal policy, with the increase of benefits such as Bolsa Família and the advance payment of court orders.
Although these measures have provided temporary relief to the economy, experts warn that they need to be adjusted to avoid overloading public accounts.
Rising and falling sectors
The Brazilian economy has shown mixed performance among productive sectors. The agricultural sector, which had a negative performance compared to last year, saw a significant drop, especially in products such as sugar cane and corn.
However, the industrial sector has been one of the drivers of growth, with emphasis on civil construction, which showed an increase of 5,7%, and the manufacturing industry, which recorded an increase of 4,2%, driven by the production of vehicles and other equipment.
Services, in turn, have also been an important source of expansion, with emphasis on information and communication activities and trade.
The growth in demand for digital services, transportation and real estate activities has driven the sector's recovery
However, it is important to highlight that the high dollar and high energy prices continue to be challenges for the services sector, especially in commerce and industry.
The Role of Fiscal and Monetary Measures
The federal government has been working to adjust the budget and strengthen Brazil's fiscal framework. However, the increase in interest rates for Central bank, the expectation of further increases in upcoming meetings and the risk of an economic slowdown in 2025 create a scenario of uncertainty.
The dollar, which is still strong, is putting pressure on wholesale costs, and this should be passed on to retail, resulting in possible pressure on inflation.
Economic recovery also depends on careful consideration of fiscal policy, as the government will need to reduce its spending expansion to ensure that the country does not face a fiscal crisis in the coming years.
According to G1, Brazil's success in 2024, with a solidly growing GDP, depends on the government's ability to balance the fiscal impulse with the control of inflation and public accounts.
Projections for the Future: The Challenge of 2025
Although the forecasts for 2024 are positive, the big challenge will be to maintain growth in 2025. The IMF revised its growth projection for the following year to 2,2%, a reduction compared to previous estimates.
This slowdown is likely to be caused primarily by restrictive monetary policy and a cooling labor market.
The fiscal measures that the government has implemented so far have yielded results, but further fine-tuning will be necessary to ensure that the Brazilian economy does not suffer a sharp slowdown in 2025.
Lula's government will have to make difficult decisions to ensure that the country remains on the path to recovery and does not face a crisis of economic stagnation.
The Influence of the External Market
An important factor for the growth of TAX ID No Brazilian is the foreign market. Exports of Brazilian products increased by 2,1%, with emphasis on food and chemical products.
However, imports grew at a faster pace, with an increase of 17,7%, which could generate imbalances in the trade balance.
This increase in imports, added to the dollar more expensive, it can impact domestic prices and lead to an increase in inflation rates, directly affecting the purchasing power of Brazilian families.
The combination of these factors increases the complexity of the government's task of maintaining economic growth at sustainable levels, without the economy becoming unbalanced.
What to Expect for 2025?
With the economy expected to perform well in 2024, many are asking: Will Brazil be able to maintain growth next year, or will a slowdown be inevitable? The government's success in adjusting its fiscal and monetary policies will be crucial to avoiding an economic crisis in the future.
Is Brazil prepared for the challenges that lie ahead in 2025 or will a slowdown be inevitable?
Since when did “CHALLENGE” become a problem for Mr. LUIS INACIO LULA DA SILVA?
Said everything
If you don't get a prediction right, the coans will come and predict the next year again and they'll get it wrong again!
The so-called “market” is going to fail again.
Brazil will indeed grow, above estimates, Lula will not give up on social policies, and so he will be reelected in 26.
Long live our President, conscious Brazilians are with the Lord. Long live Brazil, long live democracy.