Brazil Central Bank raises 2026 GDP growth forecast to 2%

The Brazilian Central Bank (BC) lifted its projection for real GDP growth in 2026 from 1.6% to 2% in the latest Report on Monetary Policy. The upward revision reflects a stronger‑than‑expected performance in the first quarter of 2026, with the economy expanding 1.1% versus the last quarter of 2025 and notable gains in agriculture, industry and services.

The BC also signaled higher expectations for household consumption, private investment and overall internal demand, while noting that inflation remains above target. The IPCA rose 0.58% in May, totaling 4.72% over the previous 12 months, above the 4.5% ceiling. The probability that inflation will exceed the ceiling in 2026 increased from 30% to 79%.

Monetary policy remains tight: the Selic rate stayed at 15% from mid‑2025 to March 2026, the highest level in two decades, before a recent cut to 14.25% – the third consecutive reduction. The BC warned that the war in the Middle East continues to pressure fuel and food prices, adding uncertainty to growth and price outlooks. Credit growth is projected at 9% for 2026, with a shift toward directed lending for micro‑ and small enterprises. The current‑account deficit is expected to narrow to US$ 56 billion, helped by stronger export volumes of soy, beef and oil.