Brazil: Preliminary GDP figures indicate 2.5% economic growth in 2025
Brazilian economic activity showed growth in 2025, according to data released this Thursday (Feb. 19) by Brazil’s Central Bank. The Central Bank’s Economic Activity Index (IBC-Br) rose 2.5 percent last year compared to the previous year.
The increases were 13.1 percent in agriculture, 1.5 percent in industry, and 2.1 percent in services. The IBC-Br excluding agriculture rose 1.8 percent in the year.
In December 2025, the IBC-Br fell by 0.2 percent compared to November, based on seasonally adjusted data. Compared to December 2024, the index rose 3.1 percent, without seasonal adjustment since the comparison is between the same months.
In the quarter ending in December, compared to the quarter ending in September 2025, the index increased by 0.4 percent.
The IBC-Br is a way to assess the evolution of the country’s economic activity and incorporates information on activity levels in the sectors of the economy - industry, commerce and services, and agriculture - as well as the volume of taxes. It helps the Central Bank’s Monetary Policy Committee (Copom) make decisions about the basic interest rate, the Selic, currently set at 15 percent per year.
Inflation
The Selic is the Central Bank’s main instrument for achieving the inflation target, which is 3 percent, with a tolerance range of 1.5 percentage points up or down.
When Copom increases the Selic, the purpose is to contain heated demand, and this has repercussions on prices because higher interest rates make credit more expensive and encourage saving. Thus, higher rates help reduce inflation, but they can also hinder economic expansion.
When Copom lowers the Selic rate, credit tends to become cheaper, encouraging production and consumption, easing control over inflation, and stimulating economic activity.
In January, the rise in electricity and gasoline prices caused official inflation for the month to reach 0.33 percent, the same level as in December. According to the Brazilian government’s statistics agency IBGE, the result led the National Consumer Price Index (IPCA) to accumulate an increase of 4.44 percent in 2025, within the target’s tolerance range.
The decline in inflation toward the target and indicators such as the IBC-Br, which show moderation in domestic growth, led to the Selic rate being maintained for the fifth consecutive time at the last Copom meeting, at the end of January.
In its minutes, Copom confirmed that it will begin reducing interest rates at its next meeting in March but did not indicate the magnitude of the cut and clarified that interest rates will remain at restrictive levels.
According to the bank, domestic economic activity maintained a trajectory of moderated growth, operating above its expansion potential without putting pressure on inflation. Even so, interest rates are being kept at restrictive levels due to the resilience of some factors that put pressure on prices, “both current and expected,” especially the dynamism still observed in the labor market.
The Selic rate is at its highest level since July 2006, when it stood at 15.25 percent per year. After reaching 10.5 percent per year in May 2024, the rate began to rise again in September of that year. The Selic reached 15 percent per year at the June 2025 meeting and has been maintained at that level ever since.
Gross Domestic Product
Published monthly, the IBC-Br employs a different methodology from that used to measure Gross Domestic Product (GDP), the official indicator of the Brazilian economy published by IBGE. According to the Central Bank, the index “contributes to the development of the country’s monetary policy strategy.”
GDP is the sum of all final goods and services produced by a country. Driven by expansions in industry and agriculture, the Brazilian economy grew 0.1 percent in the third quarter of 2025, which IBGE considers stability. The release of the consolidated GDP for 2025 is scheduled for March 3.
In 2024, GDP grew by 3.4 percent. The result represents the fourth consecutive year of growth and the largest expansion since 2021, when GDP reached 4.8 percent.
