The change in the estimate reflects a positive surprise in the third quarter final result and fourth quarter indicators.

Brazil's central bank has revised its forecast for gross domestic product (GDP) growth in 2024 upwards by three-tenths, from 3.2% to 3.5%, as shared on Thursday in its quarterly inflation report.

The change in the 2024 GDP growth projection reflects a positive surprise in the final third quarter result and fourth quarter indicators available as of the publication of this report.

From a supply perspective, the increase reflects better performance in the services sector, partially offset by declines in estimates for agriculture and industry.

Specifically, for industry, the forecast was adjusted from 3.5% to 3.3%, while the decline in the agricultural sector has deepened, from -1.6% to -2%. In contrast, estimates for the services sector rose from 3.2% to 3.8%.

The forecast for exports remained broadly stable, rising from 3.2% to 3.0%, while the estimate for imports rose from 11.3% to 13.7%, mainly reflecting a slower-than-expected slowdown in the third quarter.

2.1% GROWTH IN 2025

Brazil's central bank has also revised its GDP growth forecast for 2025 upwards by one-tenth, from 2% to 2.1%, mainly due to a stronger-than-expected expansion in the agricultural sector.

In any case, the entity has maintained the outlook that growth in 2025 will be lower than in 2024, due to the expectation of a lower fiscal stimulus, the inflection of the current monetary policy, the reduced degree of inactivity of the production factors; and the absence of a strong external impulse.

Finally, as regards inflation, projections have increased over the entire horizon presented, thus increasing the distance from the target and making convergence towards the objective more challenging.

Inflation is thus expected to remain above the target until the third quarter of 2025, before entering a downward trend. Before that, at the end of 2024, inflation will reach 4.9%.