Reality knocks at the door

BRAZIL ECONOMICS - Report 01 Sep 2026 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

GDP grew 0.5% in the second quarter, well below the figure recorded in the first quarter of 2026, although slightly better than the average forecast of 0.4%, suggesting an economic slowdown, a theme to which we had drawn attention in our most recent reports.

In recent quarters, the economy has been losing momentum, as shown by the annual growth rate, which had peaked at 3.6% in the 12 months ended in March last year and has now fallen to 1.9%, the lowest by this criterion since 2021-I, still under the effects of the pandemic.

We note, however, that output growth is quite unbalanced. The less cyclical sectors, associated with international dynamics (agriculture and mineral extraction), expanded by 8.8% in 12 months; the remaining sectors taken jointly continued to decelerate, growing only 1.3% over the same period, compared with values slightly below 4% at the end of 2024 and beginning of 2025.

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