By Gabriel Burin
BUENOS AIRES, May 28 (Reuters) – Brazil’s economy is expected to have grown faster in the first quarter against the last three months of 2025 aided by stronger manufacturing activity, a Reuters poll showed.
The service sector also contributed to the recovery, particularly in commerce, professional and household segments supported by a healthy job market, analysts said.
Gross Domestic Product (GDP) likely expanded 1.0% in January-March compared to the previous quarter, according to the median estimate of 24 analysts polled between May 20-25.
The yearly rate is seen running at 1.8%. In October-December economic growth was a scant 0.1% on the quarter and 1.8% on yearly terms. Official data are due on Friday.
‘GREATER MOMENTUM IN INDUSTRY’
“Growth is expected to be qualitatively better than in recent quarters, with less marked performance from agribusiness and greater momentum in industry,” said Rodolpho Sartori, an economist at Austin Rating.
“The quality of growth is better because the industrial sector generates more sectoral linkages in the economy and employs more people than agribusiness.”
Earlier this month a central bank leading economic indicator logged 1.3% growth for the first quarter from the previous three months but a sharper-than-expected contraction in March pointed to weaker conditions ahead.
The automotive subsector is forecast to post solid figures for last quarter mainly due to rising truck production after the launch of government-backed loans for buyers.
Meanwhile, an oil boom that has nearly doubled Brazil’s oil exports should have remained a key factor as well, just before the start of the U.S.-Israeli war with Iran, which has drawn even more attention to Latin American supply.
GOVERNMENT MEASURES INCREASING HOUSEHOLD CONSUMPTION
On the demand side, Santander economists wrote in a report that household consumption should have picked up “reflecting strong employment and income levels and possible effects of recent stimulus measures.”
The government has implemented a consumer debt relief program and income tax breaks among other steps to counter a still restrictive monetary stance despite this year’s interest rate cuts by the central bank.
Its tight policy approach amid persisting inflationary pressures, geopolitical uncertainty and caution over Brazil’s presidential election in October likely continued affecting capital spending last quarter.
“Investment, despite showing signs of improvement at the margin, should recede in annual terms… (although) partially supported by a low comparison base and the import of oil platforms,” Santander’s analysts wrote.
“For now, we maintain our expectation that GDP will grow by 1.9% in 2026. However, the announcement of new fiscal, quasi-fiscal, and credit measures in recent weeks increases the upside bias to this projection.”
(Reporting and polling by Gabriel Burin; Editing Chiara Rodriquez)
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