Brazil's Economic Growth Expected To Have Tapered Off In Q2

• Brazil's economic growth is estimated to have tapered off in the second quarter due to a pullback in farm output and softer industrial production, a Reuters poll of economists showed. This would mark the beginning of a widely-expected slowdown for Latin America's No. 1 economy as high local interest rates hamper Brazilian companies' access to credit.
• The economy likely expanded by 0.3% in the April-June quarter, well below the strong 1.4% rate of the first three months of 2025, according to the median estimate of 19 economists polled August 27-September 1. In annual terms, gross domestic product is seen at 2.2% compared to a 2.9% rise in the first quarter. GDP data are scheduled for release on Tuesday.
• Agricultural output likely contracted in the second quarter after a surge at the start of the year, an expected reversal in Brazil's farming cycle following the usual peak season of the sector. Manufacturing also likely remained weak, offsetting a better performance in other components of the country's industrial sector like oil production, while services probably contributed modestly.
• These trends were outlined in the central bank's monthly leading indicator, which already accounted for the impact of its restrictive monetary policy to cool down inflation. A major downturn could be avoided if the government notches up public spending more than expected, as it did in some past years.

(Source: Reuters)