Forecasts for Brazilian GDP in 2023

Until December of last year, the forecast for the economy in 2023 was zero growth. The economic situation showed a weak GDP in the third quarter, a decline in business confidence at the end of 2022, and factors pointing towards potential stagnation: high Selic rate, global slowdown, and falling commodities.

Although this scenario has not completely changed, we still expect interest rates to remain high for a prolonged period, global growth to be low, and commodities to continue to decline.

Positive Internal Developments

However, internally, there are factors bringing optimism. The agricultural sector, responsible for 7.6% of Brazil’s GDP, is projected to grow by an impressive 9.6% in 2023, according to our projections.

Another important factor is the impact of fiscal stimuli approved by the PEC da Transição, which allocates R$ 168 billion for the expansion of Bolsa Família and other expenses. This significant injection of resources into the economy tends to stimulate consumption.

GDP Growth in 2023

With these factors, we project a 1% growth for Brazil’s GDP in 2023. Although this is lower than the projected growth for 2022 (3%) and less than 2021 (5%), the year the country began to recover post-pandemic, it is a more positive outlook than initially expected.

Persistent Challenges

However, this growth is not expected to be enduring. The impact of the record soybean harvest on the 2023 GDP, for instance, will be temporary as most of the harvest occurs in the first quarter of the year.

Additionally, Brazil will continue to face:

  • Global Slowdown: With 20% of Brazil’s production being exported, reduced global growth and lower demand for Brazilian commodities negatively impact the GDP. The International Monetary Fund (IMF) projects global economic growth of 2.7% in 2023, compared to 3.2% in 2022.

  • High Selic Rate: Brazil’s basic interest rate is expected to remain at 13.75% for an extended period, increasing the cost of credit for consumers and businesses, which may delay investments or business expansion.

Outlook for 2024

For 2024, we expect a 0.5% growth for Brazil’s GDP. This economic scenario highlights the importance of monitoring global and internal trends to adapt business and investment strategies.

By staying informed about the Brazilian economy, you can make more assertive decisions and seize opportunities that arise, even in a challenging economic environment.