Brazil Faces Economic Paradox in 2025: Low Unemployment, Slow Job Growth, and Rising Family Debt
Brazil's 2025 economic scenario features record-low unemployment amid the slowest formal job growth since 2020 and surging family debt driven by high interest rates.
- • Brazil created 1.27 million formal jobs in 2025, the lowest since 2020, with December experiencing a loss of 618,000 jobs.
- • Unemployment is at a historic low of 5.2%, the lowest since 2012, despite slower job growth.
- • Household debt has reached 49.8% of annual income, near record-high levels along with a 29.3% income commitment to the financial system.
- • High interest rates persist with the Selic rate at 15%, leading to increased credit use and elevated personal credit interest rates above 60%.
Key details
Brazil's economy in 2025 reveals a paradoxical situation where unemployment remains at historic lows while formal job creation has slowed and household debt has reached record levels. Despite the creation of 1.27 million formal jobs throughout the year, this represents the worst performance since 2020. December alone saw a negative formal employment balance of 618,000 jobs, marking a 1.26% decline compared to the previous year. The services sector led hiring with 758,000 new jobs, followed by commerce.
Minister of Labor Luiz Marinho attributes the sluggish job growth primarily to persistently high interest rates, with the Selic rate held at 15% since mid-2025, the highest since 2006. Marinho warned that delays in reducing these rates could worsen employment figures. Despite the formal job slowdown, Brazil enjoys the lowest unemployment rate since 2012, at 5.2% as per IBGE data.
At the same time, Brazilian families face mounting debt burdens. Household debt now stands at 49.8% of annual income, nearly matching the record 49.9% reached in mid-2022. The average monthly income commitment to the financial system remains at a historic high of 29.3%. High interest costs persist, with personal credit rates above 60% annually and the overall credit to individuals rising 13.2% in 2025, driven notably by a 17.1% increase in credit card debt.
Although the government launched the Desenrola program in July 2023 to aid families in renegotiating debts, rising interest rates have pushed indebtedness up again. Economists hope that renewed efforts like Desenrola and expected Selic rate cuts starting in March 2026 will improve credit conditions by September.
The co-existence of record-low unemployment with slow formal job growth and climbing household debt highlights complex challenges facing Brazil's economy, as high borrowing costs restrain both consumers and employers.
This article was translated and synthesized from Brazilian sources, providing English-speaking readers with local perspectives.
