Brazil President Lula: Agriculture growth should allow US to consider higher economic growth this year than in 2024

Brazil President Lula: Agriculture growth should allow US to consider higher economic growth this year than in 2024

Brazil's economic growth surged in the first quarter of 2025, despite rising interest rates, according to recent data and forecasts. The country's GDP growth rate for the first quarter was 3.4%, driven by strong fixed investments, household demand, and robust farm output [2]. This performance has led to an upward revision in full-year growth forecasts and speculation about another rate hike.

The International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) have revised Brazil's GDP growth projections for 2025. The IMF now predicts a higher growth rate of 2.3%, up from its previous forecast of 2.0% [1]. The OECD, on the other hand, projects a more conservative growth rate of 2.1% for 2025, with a further slowdown expected in 2026 to 1.6% [1]. These forecasts align with the average responses of Brazilian economists surveyed by the central bank, who expect 2.13% growth in 2025 and 1.80% in 2026.

Both institutions also highlighted potential challenges, including domestic demand weakness and subdued industrial production. The Central Bank has raised rates to 14.75%, with the OECD projecting further increases to 15% by the end of 2025 [1]. The OECD noted that over 30% of public infrastructure projects are interrupted, suggesting a need for reform in automatic spending rules [1].

Economists expect economic activity in the final two quarters of 2025 to rise by less than 1%, hovering closer to stability than to meaningful growth. Factors such as fiscal and parafiscal measures by the federal government, credit-related incentives, and the expected payment of court-ordered government debts (precatórios) in August are expected to support GDP growth [3]. Despite these factors, the IMF and OECD forecasts suggest a moderate slowdown over the year, with the OECD projecting 2.1% growth in 2025 and 1.6% in 2026.

Brazil's President Lula has emphasized that agriculture growth should allow the United States to consider higher economic growth this year than in 2024. This optimism is supported by the strong performance of the agricultural sector in the first quarter, which contributed significantly to GDP growth [2].

In conclusion, while Brazil's economic growth has shown early strength in 2025, a slowdown is expected later in the year. The IMF and OECD forecasts suggest a moderate slowdown, with growth rates of 2.3% and 2.1% respectively for 2025. The key challenges include domestic demand weakness, industrial production, and the need for infrastructure reforms. Despite these challenges, Brazil's agricultural sector continues to be a significant driver of economic growth.

References:
[1] https://www.intellinews.com/brazil-s-gdp-to-slow-to-around-2-in-2025-on-structural-challenges-say-imf-and-oecd-384381/?source=brazil
[2] https://www.facebook.com/Reuters/posts/brazils-economic-growth-surged-in-the-first-quarter-despite-climbing-interest-ra/1243055564351840/
[3] https://valorinternational.globo.com/economy/news/2025/06/02/early-momentum-to-push-brazils-gdp-over-2percent-in-2025-economists-say.ghtml