The growth of Brazil’s economy was lower in the fourth quarter of 2024, due to decreased private consumption and investments that gave a meagerly 0.5% growth. Analysts say this drop is a result of fiscal measures and inflationary pressures, which still have a significant impact on the consumption of the households and the confidence of the market.
Central Bank of Brazil upped its key interest rate (that’s SELIC) to 13.25% as of January 2025, thus the strategy was to create a restrictive monetary policy environment to try and take down inflation.
The predictions show that the highest point is to be seen in the SELIC at 14.75% by the time of May, and that would be its highest figure ever since 2006. This move is expected to boost the carry trade tactics in short but it also may be a reason behind the shrinking domestic demand.
One of the bright spots in Brazil’s economy is the Agriculture sector, with its growth for the quarter seen at 1.8%. Even with the broader economic challenges, the success in this sector is going to bring the expected growth in the overall GDP.
Although limited participation in global value chains has kept some of the protectionist challenges of the U.S. out of the Brazilian case during President Trump’s leadership, other factors such as uncertainty about external demand and volatility of commodity prices remain major risks to Brazil’s economic development.
