The Brazilian economy is expected to grow 2.4% in 2025, against 3.5% in 2024, the National Confederation of Industry (CNI) announced this Tuesday (17). Official inflation based on the Broad National Consumer Price Index (IPCA) is expected to fall from 4.8% in 2024 to 4.5% next year.
The industry is expected to grow 3.3% this year and 2.1% in 2025. According to the report, the resumption of the interest rate hike cycle by the Central Bank (BC) will be the main factor that will contribute to the decrease in economic growth, but not the only one. The entity points to the slower evolution in job creation and the reduction in fiscal impulse (the ability of public spending to generate growth) as other causes for the slowdown.
“Close to the growth potential we estimate at CNI. Growth with high investment and other recent reforms, the economy is growing close to potential. We hope that growth will be sustained in the coming years”, said CNI Economics Superintendent, Mário Sérgio Telles. Potential GDP represents how much the economy can grow efficiently, without putting pressure on inflation.
The CNI estimates that the Selic rate (basic interest in the economy) will end 2025 at 12.75% per year, half a point above the current rate of 12.25%. According to the entity, the BC will continue to raise the Selic until March, when the Selic will reach 14.25% per year and will remain at that level until August, when it will begin to gradually fall, until reaching a 1.5 percentage point drop in relation to the roof.
Despite the recent exchange rate devaluation, the CNI believes that the dollar will fall throughout 2025, reaching an average exchange rate of R$5.70 next year. For 2024, the confederation projects an average exchange rate of R$5.38 throughout the year.
According to the entity, the approval of part of the spending cut package and the neutral impact of the Income Tax reform will reduce the financial market’s negative view of the government, contributing to the reduction of exchange rates and inflation.
“Other factors will act on the IPCA. We do not see this exchange rate level that we see today remaining. Throughout the year, we should see a reversal of this situation due to the reduction in fiscal risk. This will occur because of the approval of the spending cut package and because we believe that the Income Tax reform proposal will not reduce revenues”, declared Telles.
According to the CNI Economics superintendent, the noise surrounding the increase in the Income Tax (IR) exemption range will be dissipated because the history of tax reforms seeks to maintain the level of collection. “The federal government and regional governments are partners in Income Tax”, he stated.
An additional factor that should contribute to the fall in inflation will be food. The CNI estimates growth in the harvest and exports. The projection, however, considers a better climate scenario in 2025.
Public accounts
Regarding the spending cut package sent to Congress, the CNI believes that 70% to 80% of the measures proposed by the government will be approved. According to the entity, this would represent savings of around R$22 billion in mandatory spending for 2025, out of the approximately R$30 billion foreseen in the original proposal.
Despite recognizing the importance of the mandatory spending review package, the confederation estimates that the primary deficit will end next year at R$70.2 billion (0.6% of GDP), against a projection of R$34.9 billion ( 0.3% of GDP) for 2024. In relation to gross public debt, the entity predicts an increase from 78.7% of GDP in 2024 to 81.9% in 2025.
Regarding the R$168.3 billion in extra revenue that the government needed to eliminate the primary deficit this year, the CNI predicts that the Union will only be able to raise R$55 billion. The primary result represents the surplus or deficit in government accounts without interest on public debt.
