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[BUSINESS] · Brazil · 99 sources

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Brazil economy faces deceleration as Copom cuts Selic rate

Brazil is experiencing a period of economic adjustment characterized by a reduction in interest rates and slowing growth. The Copom (Monetary Policy Committee) has reduced the Selic rate from 14.00% to 13.75% per year, citing a deceleration in economic activity and inflation. This slowdown was confirmed by second-quarter GDP data. Consequently, the Ministry of Finance has lowered its 2026 GDP growth projection to 2.0% and its inflation (IPCA) projection to 4.9%.

The agricultural sector is navigating significant financial and structural shifts. While a record grain harvest is expected, traditional rural credit lines have seen a 26% decline in the area served, prompting a surge in private financing. The stock of Rural Product Notes (CPRs) has reached R$ 600.3 billion as producers seek alternative capital. Additionally, the cattle industry is entering a new cycle with a projected decrease in bovine slaughter from 43 million heads in 2025 to between 41 and 42 million in 2026, though meat production is expected to remain relatively stable due to technological improvements.

Climate risks, specifically the El Niño phenomenon, pose further uncertainty for the 2026/27 harvest, with potential impacts on rainfall and temperature across different regions.

Entities

Abiec · Banco Central do Brasil · Brazil · Central Bank of Brazil · Companhia Nacional de Abastecimento · Conab · Copom · FAO · IBGE · Ibrafe · Mato Grosso · Ministry of Finance

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