🧊 Cooling consumption

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Brazil’s economy finally shows signs of cooling

The Brazilian economy grew at an annual rate of 3.6% in Q4 2024, the Brazilian Institute of Geography and Statistics reported minutes ago. The expansion marked the country’s strongest yearly growth since the pandemic. 

• But the data also suggested that the economy may finally be losing momentum as the effects of the Central Bank’s aggressive interest rate hikes take hold. According to data from the World Bank, Brazil currently has the world’s third-highest real interest rate (with a benchmark rate of 13.25%).

👉 Why it matters. Household consumption fell 1% from the previous quarter, ending a 13-quarter streak of growth. Government spending also slowed, rising 0.6% in Q4, down from 0.8% in the previous three-month period.

What's happening. Brazil’s recent growth strategy has relied heavily on increased public spending on social policies, particularly through welfare programs and credit expansion. But with interest rates at historically high levels, that approach appears to be losing steam.

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