After surging 1.4% in the first quarter, economic activity in Brazil grew by only 0.4% over the following three months.
This is primarily due to a sharp slowdown in domestic demand. The increase in the key interest rate, which rose from 10.50% to 15% in twelve months, is further weighing on household spending and business investment.
Brazilian economic activity is also hampered by trade uncertainty, with relations between Brazil and the United States being particularly stormy.
Political issues on the way
Since August 6, the American President has imposed 50% tariffs on several Brazilian products to protest the legal action taken against former President Bolsonaro, a close associate of Trump.
This prohibitive tariff caused Brazilian exports to the United States to fall by almost 20% in August compared to the same month in 2024.
A long-term investment
Brazil's economic difficulties are not deterring investors from favouring Brazilian stocks, which are currently at a historic high. Beyond tensions with the United States, Brazilian exports remain dynamic with the rest of the world.
Brazil still has significant economic potential. It is therefore not too late to invest, but with a long-term perspective, as it will take time for the country to truly realise its full potential.
For now, we don't invest in Brazil. Check our recommended portfolio.