Ana Paula Vescovi
Director of Macroeconomics at Santander Brazil

Brazil will experience a mild economic slowdown in 2024, but monetary policy is likely to revitalise credit and capital markets.

Santander Brazil’s economic team believes 2024 will be good for South America’s largest country.

Consumer demand will be watched carefully

Household consumption and fiscal measures implemented by the government will be key to Brazil’s economic performance in 2024.

A mild slowdown is expected for the year as a whole, with domestic demand and business investment forecasted to be weak in the first half before showing signs of recovery later in the year.

Agriculture is one of Brazil’s key industrial sectors and it experienced a “super harvest” in 2023. However, this year won´t see a repeat due to the effects of El Niño, although grain production is expected to be the second highest in the country's history.

Commitment to control inflation

The central bank’s early action on inflation reduction created the conditions for interest rate cuts to begin in August 2023. In addition, the National Monetary Council set a 3% inflation target for this year, which has boosted market confidence in the government’s commitment to long-term control of inflation.

We expect inflation to continue on a downward trajectory with a sustained reduction in the basic interest rate by mid-2024. However, the interest rate cycle in the United States will influence the speed and scale of further domestic base interest rate reductions.

Revitalised credit and capital markets

Gradual cuts in interest rates are likely to revitalise Brazil’s debt and equity markets. We anticipate an increase in both primary and secondary debt issuances, as well as stronger trading in equities and fixed income.