Brazil Central Bank Forecasts Lower 2027 Growth Than Government

The Central Bank of Brazil projects a 1.4% GDP growth rate for 2027, a significantly more conservative estimate than the 2.3% expansion forecast by the federal government. Acting Economic Policy Director Paulo Picchetti stated that this output-gap opening is essential for prices to converge toward the bank's 3% inflation target.

This divergence follows a recent adjustment by the Ministry of Finance, which lowered its 2026 GDP growth forecast from 2.3% to 2.0% due to slowdowns in the industrial and services sectors. While the ministry reduced its 2026 inflation forecast to 4.9%, it raised its 2027 inflation estimate to 3.8%, citing potential agricultural losses from the El Nino weather phenomenon.

Governor Gabriel Galipolo emphasized that the bank is approaching these forecasts with humility amid high economic uncertainty. He noted that the bank intends to avoid overreacting to individual data points to prevent unnecessary volatility. Galipolo also announced plans for macroprudential measures to curb predatory credit and aggressive lending, pointing to a 65% credit card delinquency rate as evidence of a design flaw in current lending products.