Brazil: Economic activity growth flies past market expectations to a seven-month high in January
Latest reading: The Brazilian economy capered into 2025, with economic activity increasing 0.9% month on month in seasonally adjusted terms in January, improving from the upwardly revised 0.6% decline in December. The figure marked the best reading since June 2024, and was roughly triple market expectations.
On an annual basis, economic activity rose 3.6% in January, which was better than December’s upwardly revised 2.6% expansion. Meanwhile, the trend pointed down, with the annual average growth of economic activity coming in at 3.8% in January, down from December’s 3.9% reading.
Retail sales rebounded 0.2% month on month in seasonally adjusted terms in January (December: -0.2% mom s.a.). Similarly, industrial output improved from December’s 0.3% fall, flatlining in January.
Looking at sectoral data, services output—which accounts for roughly 60% of GDP—posted a 0.6% seasonally adjusted monthly decline in January, deteriorating from December’s 0.1% rise.
Outlook: Our Consensus forecast is for quarter-on-quarter GDP growth to be roughly four times higher in Q1 2025 compared to the 0.2% rise logged in the prior three months. January’s sharp upturn in the economic activity index—a GDP proxy—bears out this projection.
Panelist insight: Reflecting on risks to the near-term outlook, analysts at the EIU mentioned:
“Uncertainty surrounding the October 2026 election and the policy direction of the next administration will also weigh on investor sentiment, as will concerns over the broader impacts of US trade protectionism on US and global growth, further reducing activity and increasing costs at the margin.”