Brazil Economy Rebounds 1.1% in Q1 as Rate-Cut Outlook Dims

1 articles · Updated · Reuters · May 29

Brazil's GDP grew 1.1% quarter on quarter in Q1, beating the 1.0% forecast and accelerating from revised gains of 0.3% in Q4 and 0.1% in Q3 2025.
Household consumption rose 1.0% and investment jumped 3.5%, helped by tax relief, higher minimum wages and other Lula government measures that lifted disposable income.
The stronger data, alongside a tight labor market and 4.64% inflation versus a 3% target, has led economists to warn the central bank may keep the Selic at 14.5% for longer.
Capital Economics now expects no June rate cut, while the Finance Ministry says growth should cool as stimulus fades even as it keeps its 2026 GDP forecast at 2.3%.
Agriculture rose 2.0% on a strong soybean harvest, industry gained 1.0% and services 0.5%, underscoring broad-based momentum but also the challenge of sustaining it without policy support.

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