FX.co ★ Brazil Cuts 2025 GDP Growth Forecast to 2.2%

On Thursday, Brazil's Finance Ministry revised its 2025 economic growth forecast down from 2.3% to 2.2%. This adjustment was influenced by third-quarter results that fell below expectations, impacting predictions for the year’s final quarter, as reported by Reuters. As Latin America’s largest economy, Brazil is experiencing a slowdown following the central bank's aggressive monetary tightening strategy. This approach aims to stabilize inflation at the 3% target, with an allowance of plus or minus 1.5 percentage points. Since September 2024, the central bank has increased interest rates by a total of 450 basis points, elevating the benchmark Selic rate to 15%, marking its highest level in nearly two decades. Additionally, the ministry reduced its 2025 inflation forecast from 4.8% to 4.6%, which remains above the official target. Despite these changes, the government maintained its GDP growth prediction for next year at 2.4% and slightly lowered its 2026 inflation estimate from 3.6% to 3.5%.