Brazil GDP: 3.4% Growth in 2024, but Deceleration in Q4
Brazil’s economy grew 3.4% in 2024, exceeding forecasts of 1.6%, with a 0.2% growth in Q4, reflecting a significant slowdown from Q3’s 0.9%. Key sectors like agriculture contracted, while industry and services showed modest growth. Investment and government consumption were the main drivers, though household consumption and exports fell. While the agricultural sector is expected to drive growth early in 2025, a weaker fiscal push and tightening monetary policy may lead to stagnation in the second half, with a 1.8% growth forecast for 2025.
Figure 1: Brazil GDP by Sectors (2019=100, Seasonally Adjusted)
Source: IBGE
The Brazilian National Statistics Institute (IBGE) has released the GDP data for the fourth quarter of 2024. The data shows that the Brazilian economy grew 0.2% (q/q) in the last quarter of the year, a significant deceleration from the third quarter, when the economy grew 0.9%. Looking at the full year of 2024, the Brazilian economy grew 3.4%, much higher than what economists were predicting at the beginning of the year (1.6%). It is the second consecutive year in which most economists missed growth forecasts. We believe most of this was related to the fiscal push seen in late 2023, and its multiplicative impacts, especially through consumption, contributed to the higher-than-expected growth.
Looking at supply, the agricultural sector contracted by 2.3%, revealing worse production in the last quarter of the year. Most important was the growth in the industrial and services sectors. The industrial sector grew 0.3% in the quarter, influenced by utilities, which contracted by 1.3% in the quarter, while manufacturing grew by 0.8% and the extractive industry grew by 0.7%. Construction surprised, growing by 2.3% in the quarter. Services, the biggest sector of the economy, grew only 0.1%, with most of its sectors stagnating, likely indicating a deceleration.
Figure 2: Brazil GDP by Demand (2019 =100, Seasonally Adjusted)
Source: IBGE
On the demand side, the biggest contributor to growth was investment, which grew 0.4% (q/q), and government consumption, which grew 0.6%. Household consumption contracted by 1.0% in the quarter, which could be seen as an alert that some deceleration is underway. Exports contracted by 1.4%, revealing a more adverse external scenario.
With this situation, it is starting to become clear that the economy is finally reacting to the tight monetary policy with this deceleration in the fourth quarter. For the moment, we are still seeing the economy growing in the first half of the year, pushed especially by the agricultural sector, for which early estimates point to a record harvest, increasing production by 11% in 2025. However, once this impact passes and with fiscal pushes being timid this year, we believe the Brazilian economy will stagnate in the second half of the year, which leads to our 1.8% growth estimate for 2025.