The Institute for Applied Economic Research (Ipea) has revised upwards its forecast for the growth of the Brazilian economy in 2026, from 1.6% to 1.8%. The estimate for 2027 remains at 2.0%, indicating a moderate acceleration of activity in the coming years. These figures are part of the latest revision.
The revision primarily reflects a more favorable start to the year than expected. After the end of 2025 was marked by a loss of dynamism, January indicators show widespread growth across sectors, including those more sensitive to credit.
“The scenario is evolving, and the latest data indicate an improvement at the start of 2026. Our job is precisely to continuously monitor these changes, based on evidence, adjusting projections whenever the fundamentals of the economy suggest,” explains Claudio Hamilton dos Santos, Coordinator of Monitoring and Conjuncture Studies.
Published quarterly, the Overview of the Conjuncture compiles Ipea’s insights on the main movements of the Brazilian economy, combining analysis of recent data with projections for upcoming periods. Systematic monitoring allows for the identification of trend changes, qualifying public debate and guiding decisions in a scenario marked by uncertainties.
“Ipea’s role is precisely this: to monitor, interpret, and communicate what the data shows, without losing sight of the complexity of the scenario. Our commitment is to consistent analyses that help understand the movements of the economy in real time,” adds Claudio Amitrano, Director of Macroeconomic Studies and Policies at Ipea.
Growth supported by consumption and income – The scenario remains primarily supported by household consumption, favored by income expansion, a still heated labor market, and public policies that maintain access to credit. At the same time, activity growth continues to be limited by the effects of recent monetary tightening.
The Brazilian economy maintains a pattern observed in recent years: sectors more influenced by income and/or external demand, such as agriculture, extractive industries, and services, continue to perform robustly, while segments more sensitive to interest rates show greater deceleration.
For the first quarter of 2026, growth is expected to be 0.8% compared to the previous quarter and 1.4% year-on-year, with highlights in services and household consumption.
Interest rates, war, and external uncertainties – Despite the short-term improvement, the scenario remains conditioned by external factors and the trajectory of interest rates. The start of the Selic rate reduction cycle tends to favor activity throughout the year, but its pace remains uncertain.
The escalation of tensions in the Middle East has increased international volatility and could impact commodity prices, especially oil, which brings mixed effects for Brazil: while it pressures inflation, it could favor exports and revenue.
Stable inflation, but with a change in composition – The inflation projection for 2026, measured by the IPCA, remains at 4.2%, but there have been significant changes in its composition.
Prices of free food and services have been revised downwards, reflecting recent improvements in these components. On the other hand, the expected rise in fuel prices has led to an upward revision of administered prices, pressured by the increase in oil prices in the international market.
Investments still weak, but with recovery prospects – Investments remain a key point of attention. Despite signs of marginal improvement, they still accumulate a decline and are expected to fall by 1.1% in 2026, with recovery anticipated only in 2027.
Meanwhile, household consumption is expected to grow by 1.5% in 2026, supported by income and measures such as the minimum wage adjustment and changes in income tax, although pressured by high interest rates and indebtedness.
Sectors: services lead, industry still pressured – On the supply side, the services sector is expected to continue being the main driver of the economy. The industry is likely to advance moderately, still limited by the cost of credit, while agriculture maintains positive growth, although decelerating after the strong performance of 2025.
Source: IPEA.
Original published at O Cafezinho.