Brazil: Economic activity hits eight-month high in November
Latest reading: Economic activity—a proxy for GDP—rose 0.7% on a seasonally adjusted month-on-month basis in November, following an upwardly revised 0.1% decline in the prior month. November’s reading was the strongest since March and overshot market expectations.
Relative to the prior month’s data, readings in November improved for the industrial sector (+0.8% in seasonally adjusted month-on-month terms vs -0.9% in October) and the services sector (+0.6% vs +0.1% in October); the services sector accounts for roughly 60% of GDP. In contrast, the reading for the agricultural sector worsened (-0.3% vs +1.6% in October).
In annual terms, economic activity increased 1.2% in November, following an upwardly revised 0.7% increase in the prior month.
Outlook: Our Consensus is for sequential GDP growth to have decelerated from the third quarter, flatlining in the fourth quarter, as near two-decade high interest rates cool the economy. That said, available data points to upside risks to this projection: Economic activity rebounded in October–November, rising 0.3% (July–September: -0.8% s.a. qoq).
Looking further ahead, quarter-on-quarter GDP growth should spike in Q1 2026, before inching down in Q2, where it should stabilize until the end of the year. Overall, the economy will expand at a slower pace in 2026 than in 2025, as past interest rate hikes knock fixed investment growth.
Key factors to watch include changes in fiscal policy ahead of general elections in October, trade talks with the U.S. and the timing and speed of interest rate reductions.