Brazil economy faces recession risks and logistics contraction

Brazil is facing signs of economic deceleration and sector-specific contractions. According to FecomercioSP, high debt levels, high interest rates, and the El Niño phenomenon could trigger a recession by 2027. While GDP grew by 1.1% in the first quarter and 0.5% in the second, growth is increasingly reliant on non-cyclical sectors like agribusiness and extractive industry. The Central Bank's Focus bulletin has already lowered the 2026 growth projection from 2% to 1.7%.

Household debt remains a significant concern, with Serasa reporting 83.5 million indebted individuals. Although social programs have boosted real wages, much of this income is being absorbed by financial expenses and online gambling. Furthermore, investment in capital goods has declined by 5%.

In the logistics sector, the World Research Institute (WRI) reported that Brazil's logistics growth index fell to 49.5 points in September, marking its lowest level in the series. A reading below 50 indicates contraction. This decline was driven by reduced business volumes and low business confidence amid high credit costs and electoral uncertainties. Brazil's logistics performance trailed both regional and global averages during this period.