Brazil: Growth to lag trend as policy tightens – Societe Generale

Societe Generale’s Dev Ashish expects Brazil’s economy to expand below trend in 2026 as tighter policy and a weaker external backdrop weigh on activity. Inflation is seen pressured by higher Oil prices, though soft demand offers some cushion. The Central Bank of Brazil (BCB) is projected to ease cautiously, with larger rate cuts postponed until Oil pressures recede, while elections cloud fiscal consolidation prospects and medium‑term direction.

Sub‑trend growth with cautious BCB easing

"Economy to grow below trend in 2026 as tighter policy and weakening external outlook weigh on activity."

"Higher oil price is pushing expectations higher, though weak demand cushions somewhat."

"BCB to ease slowly; meaningful cuts delayed until oil pressures fade."

"Oil helps but elections add uncertainty to consolidation and medium‑term fiscal direction."

"Balance of risks spans global demand, oil‑driven inflation, and post‑election fiscal shifts."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)