Report warns of a slowdown to 1.5% in 2025 due to factors such as monetary policy and the commodities market
THE UBSa Swiss investment bank, released a report in which it maintains its projections for the growth of the Brazilian economy in 2024 and 2025, even though the GDP (Gross Domestic Product) grew more than expected in the 2nd quarter of 2024. It estimates expansion of 2.8% for this year. The bank warns of a slowdown to 1.5% next year and states that the solid performance “difficultly” will be repeated in the 2nd quarter and subsequent months.
In the report, prepared by economists Fabio Ramos, Alexandre de Azara and Rodrigo Martins, the experts explained that, despite the optimistic estimate for 2024, factors such as monetary policy and the commodities market could negatively influence subsequent economic growth. “The spread between the real and neutral interest rates is high and could rise. Commodity prices are not as favorable as in the past, given the global slowdown.”.
The performance of Brazilian GDP in the 2nd quarter, which registered an increase of 1.4%, exceeded market expectations, but was in line with UBS BB’s forecasts.
Economists also project a reduction in fiscal stimulus in the coming months. This is due, in part, to transfers through court-ordered payments and emergency expenses related to the floods in Rio Grande do Sul. This reduction in fiscal stimulus is seen as one of the factors for the economic slowdown anticipated for 2025.
In comparison, market projections, consulted by Central Bank in the Focus Bulletin, indicate GDP growth of 2.46% for this year and 1.85% for next year. These estimates, although more conservative than those of UBS BB for 2024, follow the same trend of moderation in growth.
With information from Investing Brazil.
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