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Brazil forecasts lower 2026-27 growth as debt and inflation risks persist
Brazil’s Finance Ministry cut its 2026 GDP growth forecast to 2.0% and set the 2027 outlook at 2.3%, while warning that household debt service reached 28.9% of income.
Societe Generale’s Dev Ashish reviewed Brazil’s updated macro-fiscal forecasts from the Finance Ministry, noting a weaker near term growth picture for 2026 and 2027 alongside persistent household and inflation pressures.
The ministry lowered its 2026 GDP growth forecast to 2.0% from 2.3% and its 2027 forecast to 2.3% from 2.5%. The update cited the ongoing effects of restrictive monetary policy, weaker services activity, and a softer industrial outlook.
The report said the slowdown is more gradual than a sharp downturn, with services and manufacturing feeling high borrowing costs. It also pointed to record debt service burdens, with household debt service payments at a historical high of 28.9% of income, constraining how much wage gains can translate into consumer spending.
On inflation, the government revised its 2026 IPCA forecast down to 4.9% from 5.1% and raised 2027 to 3.8% from 3.6%. Societe Generale highlighted upside risks including higher oil prices, El Niño related supply shocks, and potential weather and livestock cycle reversals, while also warning that fiscal support is likely to fade after the election.