Brazil's Economy Shows Modest 0.1% Growth in Q3 2025 Amid Signs of Slowdown
Brazil's economy grew by a modest 0.1% in Q3 2025, reflecting a slowdown driven by high interest rates and cautious fiscal policies despite positive employment and sectoral growth.
- • Brazil's GDP grew 0.1% in Q3 2025 compared to the previous quarter, reaching R$ 3.2 trillion.
- • Industrial sector led growth at 0.8%, services sector remained stable at 0.1%.
- • High Selic interest rate at 15% is slowing economic activity to control inflation.
- • Economists view slowdown as necessary for sustainable growth and inflation management.
- • Government spending increased, boosting consumption but raising fiscal and inflation concerns.
Key details
Brazil's economy experienced a marginal growth of 0.1% in the third quarter of 2025 compared to the second quarter, reaching a gross domestic product (GDP) of R$ 3.2 trillion. Year-on-year, the GDP rose 1.8%, reflecting a 2.7% increase when measured over the last four quarters. This data, released by the Brazilian Institute of Geography and Statistics (IBGE), underscores a notable economic slowdown after a phase of strong recovery since 2022.
The industrial sector led the quarterly growth with a 0.8% increase, followed by agriculture at 0.4%, while the services sector remained nearly flat, growing just 0.1%. Within services, transportation and storage (+2.7%), information and communication (+1.5%), and real estate activities (+0.8%) were notable contributors. Family consumption showed stability, increasing only 0.1%, whereas government spending grew by 1.3%. Additionally, fixed capital formation grew 0.9%, exports surged by 3.3%, but imports fell by 0.3%.
Economists interpret the slowdown as a double-edged sword. While rapid growth post-pandemic had pushed unemployment down to a historically low 5.4%, economic cooling serves to moderate inflation pressures, currently at 4.68% annually. Brazil's benchmark Selic rate remains high at 15%, the highest since 2006, which has led to constrained industrial transformation and consumer spending, evidencing deceleration across sectors.
Despite these challenges, a strong job market with rising wages provides some cushion against contraction. Some economists, including Mansueto Almeida, advocate for sustainable growth of 2% to 2.5% yearly complemented by lower interest rates in the future to better balance inflation and growth.
Moreover, increased fiscal spending has stimulated consumption but raised inflation concerns, potentially risking fiscal stability if spending controls are not enforced. On a positive note, poverty has declined, with 8.6 million Brazilians lifted out of poverty over the past year.
The IBGE survey, conducted quarterly since 1988, remains fundamental in tracking Brazil's economic trajectory, though experts caution that GDP figures alone may not fully capture issues like income distribution and quality of life.
Overall, Brazil faces a cautious economic outlook with hopes for a "soft landing," where inflation is controlled without triggering a recession, amidst ongoing adjustments in fiscal and monetary policies.
This article was synthesized and translated from native language sources to provide English-speaking readers with local perspectives.