OECD Raises Brazil's 2025 Growth Forecast, Credits AI for Global Resilience Amid Warnings

The Organization for Economic Co-operation and Development (OECD) released updated economic forecasts on Tuesday, painting a mixed picture for global and Brazilian economies. The OECD increased Brazil's GDP growth projection for 2025 to 2.4%, up from 2.1%, and to 1.7% for 2026, citing expanded production capacity and a strong agricultural harvest expected to rise by 17%. Unemployment has hit a record low of 5.6%, with real incomes up over 3%, supporting household consumption.

However, the report warns of slowing momentum, with Brazil's activity index falling 1.8% since April and retail sales and industrial production dipping in September. Inflation remains a challenge, with the OECD cutting its 2025 consumer price index forecast to 5.1%, but persistent pressures from services and food keep monetary policy tight. Brazil's Central Bank has maintained a hawkish stance, raising the Selic rate to 15% by end-2024, with easing predicted only in 2026.

Globally, the OECD credits rising artificial intelligence investment for holding growth together, mitigating the impact of U.S. tariff hikes. Global GDP is forecast to grow 3.2% in 2025, slow to 2.9% in 2026, and recover to 3.1% in 2027. The U.S. economy is expected to decline to 1.8% in 2025, while the euro zone's growth was revised up to 1.3% for 2025. China's growth is stable at 5% for 2025 but may drop to 4.4% in 2026 due to tariff effects.

The OECD cautions that this resilience is brittle, with inflation risks persisting and trade growth predicted to decrease from 4.2% in 2025 to 2.3% in 2026. Fiscal challenges loom for Brazil, with public debt projected to rise to 82.2% of GDP by 2027, requiring careful navigation in the coming years.