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Fitch raises Brazil's GDP forecast to 2.1% in 2026

Fitch raised its forecast for Brazil's GDP (Gross Domestic Product) growth this year, following the economy's strong performance in the first quarter. However, the risk rating agency considered that the lower fiscal impu...

Publicado em 04/06/2026 2 min de leitura
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Fitch raises Brazil's GDP forecast to 2.1% in 2026
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Fitch raised its forecast for Brazil's GDP (Gross Domestic Product) growth this year, following the economy's strong performance in the first quarter. However, the risk rating agency considered that the lower fiscal impulse next year should weigh on activity, according to the quarterly Global Economic Outlook (GEO) report, released this Thursday (4).


Brazil's GDP is expected to grow 2.1% in 2026, before slowing to 1.7% in 2027 and recovering slightly to an increase of 2% in 2028, Fitch estimated. In the previous report, in March, the projection was for an increase of 1.9% this year and 1.8% next year.


The agency noted that the unemployment rate at a historic low and real wage gains continue to support Brazilian consumption, as well as the tax reform approved in 2025 and which reduced taxes on the lower-income population, balancing it with an increase in taxes on higher-income families. The dynamism of the agriculture and extractivism sectors also supported growth, he highlighted.

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For 2027, Fitch's scenario projects a lower fiscal impulse for the economy, considering the end of the electoral period.


The agency pointed out that uncertainties about domestic politics pending the general elections in October, the El Niño phenomenon and the global energy shock caused by the war in the Middle East also contribute to a more rigid stance by the Central Bank of Brazil.


"The IPCA-15 in mid-May indicates a continued acceleration in prices and inflationary expectations have also risen", he warned.

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Fitch projected that Brazilian inflation should rise to 5% by the end of 2026, breaking the Central Bank's tolerance band, before gradually returning to 4% in 2027.


In the same way, the BC of Brazil should adopt a more gradual pace of cuts in the Selic rate. According to Fitch, interest rates should fall to 13% by the end of 2026, compared to the 12% previously forecast, and to 10.5% in 2027 - unchanged projection compared to March.


The possible monetary easing in Brazil and the interest differential with the US Federal Reserve (Fed) should put pressure on the real to gradually weaken against the dollar, also considering concerns about the fiscal side.


By Lucinda Pinto: Revisions put interest at around 14% per year | MARKET CLOSURE



Source: CNN

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