Key insights
- Bank of America expects Brazil's GDP growth to slow to 2.3% in 2026 and 2.0% in 2027 due to restrictive monetary policy, despite positive industrial production data in Q1. While seemingly localized, a slowdown in a major emerging market like Brazil can have a slight negative impact on global growth sentiment, indirectly affecting US equities.
Investing.com -- Brazil's industrial production rose 0.1% in March on a seasonally adjusted monthly basis, according to Bank of America analysts, marking a slowdown from February's 0.9% expansion but exceeding forecasts that anticipated a 0.9% contraction.
The yearly comparison showed industrial production increased 4.3%, up from a 0.7% decline in the previous month. Bank of America noted that three additional business days in March 2026 compared to March 2025 partially explained the strong annual growth rate. Momentum reached 1.0%, compared to 0.3% in February.
All four main industrial categories posted monthly gains. Capital goods grew 0.6%, intermediate goods expanded 0.5%, and consumption goods rose 0.5%. Within consumption goods, durables increased 1.7% while semi and non-durables grew 0.4%.
Oil products and biofuels led sector gains with a 2.2% monthly increase, followed by chemical products at 4.0% and automotive and auto parts at 1.1%. Bank of America attributed the automotive sector strength to resilient sales supported by a strong labor market.
Nine of 25 activities recorded monthly growth on a seasonally adjusted basis. The diffusion index, which measures the proportion of products with year-over-year production increases, climbed to 55.6% from 36.2% in February.
Bank of America maintained its forecast for Brazil's gross domestic product to grow 2.3% in 2026 and 2.0% in 2027, expecting activity to decelerate as restrictive monetary policy weighs on the economy.