Brazil's government lifts 2025 GDP forecast, nudges inflation outlook higher
BRASILIA, May 19 (Reuters) - Brazil's Finance Ministry on Monday nudged its growth forecast higher and lifted its inflation projection for this year, according to fresh estimates from its economic policy secretariat.
Gross domestic product (GDP) is now seen expanding 2.4% in 2025, up from the 2.3% seen in March, while the 2026 forecast was kept at 2.5%. Meanwhile, consumer prices are expected to rise 5.0% this year and 3.6% next year, compared with previous estimates of 4.9% and 3.5%, respectively.
The upward revision of the 2025 GDP projection was related to a higher economic growth outlook for the first quarter, and to raised predictions of agricultural production in the year, according to the secretariat.
Brazil's central bank hiked the benchmark interest rate to 14.75% earlier this month, its highest level in nearly two decades, with policy makers saying "significantly contractionary" policy would be needed for a prolonged period to return inflation to target.
Guilherme Mello, the economic policy secretary at the Finance Ministry, told journalists in Brasilia that monetary policy has indeed been impacting the government's projections.
He said a slowdown in economic activity is expected for the second half of the year, mostly on the back of higher rates, with effects already seen in cyclical segments of the economy.
Brazil confirmed its first outbreak of bird flu on a commercial farm on Friday, triggering a series of poultry export restrictions. Mello said it was too early to gauge the economic impact.
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