Brazil: Economic activity loses momentum in February
Latest reading: Economic activity—a proxy for GDP—rose 0.6% in seasonally adjusted month-on-month terms in February, following a 0.9% rise in the previous month. Despite the slowdown, growth still topped market projections, signaling the economy’s resilience to near two-decade high interest rates.
Relative to the previous month’s figures, the reading for the services sector—which accounts for roughly 60% of GDP—worsened in February (+0.3% in seasonally adjusted month-on-month terms vs +0.9% in January). In contrast, readings picked up for the agricultural sector (+0.2% vs -1.3% in January) and the industrial sector (+1.2% vs +0.4% in January).
In annual terms, economic activity fell 0.3% in February, following a 1.1% increase in the prior month.
Outlook: Our Consensus is for sequential GDP growth to have fired on all cylinders in Q1, accelerating to a one-year high, with available data backing this projection: Economic activity expanded 1.3% in January–February, notably above Q4 2025’s 0.4% soft rise. Looking ahead, our panelists see quarter-on-quarter growth inching down from Q1 in Q2, before broadly stabilizing until end-2026.
Overall this year, the economy will expand at the softest rate in the post-pandemic era, partly due to fixed investment growth taking a hit from past interest rate hikes.
A key downside risk to the outlook is fewer interest rate reductions as a result of higher inflation due to a prolonged war in the Middle East. Additional factors to track include changes in U.S. tariffs and domestic fiscal policy ahead of general elections in October.