Brazil’s Gross Domestic Product (GDP) is anticipated to confirm a weaker growth trajectory in the third quarter of 2025, signaling a notable economic deceleration. This expected slowdown follows a robust performance in the first half of the year, prompting economists to analyze the underlying factors and their potential implications.
The anticipated moderation is not a cause for alarm but rather a natural adjustment after a period of strong expansion. Understanding these shifts is key to grasping the current economic landscape and its future direction.
This report delves into the expert analyses, highlighting the key sectors influencing this trend and the economic indicators that will shape the coming months. We will explore the role of agriculture, industry, services, and the labor market, as well as the impact on consumption and investment, according to insights from leading financial institutions.
Disseminated Moderation Expected Across Sectors
Economists like Leonardo Costa from ASA foresee a “disseminated moderation” in economic activity. He explains that after a strong first semester, the pace is expected to cool down. This is largely due to the agricultural sector, which, after a seasonal boost from harvests, is not projected to repeat its early-year performance.
“The slowdown was expected, the agricultural sector, the main engine of early 2025, should now contribute neutrally, without repeating the extraordinary impulse of the last harvest,” Costa states. He further elaborates that the extractive industry, a recent highlight, might lose momentum in the third quarter, while other industrial segments continue at a more subdued pace.
This collective cooling across various segments paints a picture of widespread moderation, aligning with the expected rotation of economic activity after a first half that exceeded potential. Recent industrial production data already hinted at this, showing a 0.1% advance, below the market’s 0.5% median projection, and a 0.5% year-on-year decrease.
Labor Market and Services Provide Support
Despite the cooling in some areas, Rafael Perez, an economist at Suno Research, points to the labor market, the services sector, and income growth as crucial pillars sustaining economic activity. He notes that after a very high expansion in 2025, a moderation was expected, with an accommodation anticipated in the third quarter.
XP analysts suggest that domestic activity is decelerating in the second half of the year, primarily due to credit restrictions. Factors such as restrictive interest rates, rising default rates, and increasing household debt are contributing to this scenario. However, this trend is being “cushioned” by an increase in real household income and a robust labor market, despite initial signs of employment stabilization.
Projections from Itaú indicate that the services sector is expected to grow by 1.5% in Q3 2025 compared to the previous year, a slight decrease from the 2% growth in the second quarter. This movement is attributed, in part, to a loss of momentum in “other services,” with a particular negative highlight in services provided to families.
Consumption and Investment Face Headwinds
Both household consumption and business investments are also expected to decelerate in Q3 2025. This is a direct consequence of the current environment of high interest rates and increased household indebtedness, even with rising incomes. For businesses, the higher cost of investment and economic uncertainties are likely delaying expansion plans.
Itaú forecasts that household consumption will advance by 1.2% in the third quarter compared to the same period last year, a step down from the 1.8% growth recorded in the second semester. Similarly, investments are projected to see a 2% increase during the same period, a notable slowdown from the 4.1% growth seen in the second quarter.
Economic Outlook and Projections
Looking ahead, Itaú projects a 2.2% GDP growth for Brazil in 2025. They identify a slightly downward risk balance, influenced by the dynamics of the credit market, particularly concerning INSS (National Institute of Social Security) loans and tax changes (IOF). However, recent improvements in credit concessions to individuals and businesses are reducing the probability of these negative risks materializing.
Other institutions also offer their projections for the year. Suno Research forecasts a 2.3% GDP advance, while XP anticipates a 2.1% growth. Daycoval estimates a cumulative GDP increase of 2% for 2025. These figures collectively suggest a moderate but positive growth trajectory for the Brazilian economy.
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