BUENOS AIRES, Sept 1 (Reuters) – Brazil’s economy is projected to have grown by 0.3% in the second quarter of 2025, according to a median forecast from a survey of 19 economists conducted between August 27 and September 1. This marks a notable slowdown from the 1.4% expansion recorded in the first quarter, driven by a contraction in agricultural output and sluggish industrial activity. n nThe dip aligns with expectations of a broader economic cooling in Latin America’s largest economy, influenced by tight monetary conditions that have limited credit availability for businesses. High domestic interest rates, maintained to control inflation, have contributed to reduced investment and weaker production across key sectors. n nOn the demand side, household spending showed modest growth, while fixed investment declined. Government consumption edged up slightly, and net exports shifted from being a drag in Q1 to a positive contributor in Q2, supported by rising exports and falling imports. n nYear-on-year, GDP is estimated to have risen 2.2%, down from 2.9% in the prior quarter. The central bank’s leading economic indicator reflected these trends, factoring in the effects of its restrictive monetary stance. n nAlthough U.S. tariffs of 50% on certain Brazilian goods have been imposed, their overall impact on the national economy is expected to be limited, though agricultural sectors may face more pronounced challenges. n nAnalysts from UBS caution that growth could approach zero or turn negative in the second half of 2025, despite the relatively strong first-half performance keeping annual growth near 2%. Goldman Sachs noted that services contributed modestly, while manufacturing weakness offset gains in areas like oil production. n nThe outlook could improve if public spending exceeds current projections, as has occurred in previous years. Market observers will also monitor policy responses from President Luiz Inacio Lula da Silva, particularly support measures for industries affected by U.S. trade actions, ahead of next year’s general elections. n— news from Reuters n
— News Original —nBrazil’s economic growth expected to have tapered off in Q2n nBUENOS AIRES, Sept 1 (Reuters) – Brazil ‘s economic growth is forecast to have tapered off in the second quarter due to a pullback in farm output and softer industrial production, a Reuters poll of economists showed. n nThis would mark the beginning of a widely-expected slowdown for Latin America ‘s No. 1 economy as high local interest rates hamper Brazilian companies ‘ access to credit. n nSign up here. n nU.S. tariffs recently applied on Brazil at a hefty 50% rate, one of the most punitive, should only have a small impact on the overall economy, although with a more visible hit in some sectors, particularly agriculture. n nThe economy likely expanded 0.3% on the quarter in April-June, well below the strong 1.4% rate of the first three months of 2025, according to the median estimate of 19 economists polled August 27-September 1. n nOn the demand side, “we anticipate a positive but light expansion of household consumption during Q2 and a decline in gross fixed capital formation,” Goldman Sachs economists wrote in a report. n n”Government consumption is expected to have recorded a small sequential increase, and the contribution of net-exports to growth to switch from a drag in Q1 to positive in Q2 driven by rising exports and declining imports.” n nIn annual terms, gross domestic product is seen up 2.2% compared to a 2.9% rise in the first quarter. GDP data are scheduled for release on Tuesday. n nAgricultural output likely contracted in the second quarter after a surge at the start of the year, an expected reversal in Brazil ‘s farming cycle following the usual peak season of the sector. n nManufacturing also likely remained weak, offsetting a better performance in other components of the country ‘s industrial sector like oil production, while services probably contributed modestly. n nThese trends were outlined in the central bank ‘s monthly leading indicator which already accounted for the impact of its restrictive monetary policy to cool down inflation. n nThe second quarter “will likely show sub-potential growth but the risk is for zero or negative growth in the second half of 2025,” UBS analysts wrote in a report. n n”Despite the weaker second half, the high base from the first half of 2025 will still leave the annual average growth close to 2%, but with the year ending worse than it began.” n nA major downturn could be avoided if the government notches up public spending more than expected, as it did in some past years. n nAnalysts will be following closely President Luiz Inacio Lula da Silva ‘s support measures for segments hurt by US tariffs and their effect next year, when Brazil will hold general elections. n nReporting and polling by Gabriel Burin; Editing by Ross Finley and Toby Chopra