Business · Economy · 2 hrs ago
Brazilian household spending is expected to slow sharply
Household spending, long a major driver of Brazil’s economy, is losing momentum.
Economists expect it to grow about 1% this year and less next year, with some warning it could stagnate.
Spending on goods and services accounts for 63% of Brazil’s gross domestic product, or GDP.
High household debt and income commitments, along with slower growth in jobs and consumer credit, are limiting purchases.
Household consumption fell 0.4% in the second quarter compared with the first, and economists see a risk of another decline in the third.
The government is also expected to reduce its fiscal support next year to contain rising public debt.
Economists expect investment and exports to take a larger role in supporting economic growth.
Brazilian household consumption is expected to grow by around 1% in 2026 and less than that in 2027, its weakest pace since the pandemic, economists say.
Consumption accounts for 63% of Brazil’s gross domestic product and has been a major driver of economic growth in recent years.
Economists cite high household debt and income commitments, alongside weaker momentum in jobs and credit.
The slowdown may leave investment and exports with a larger role in driving economic activity.
Household consumption fell 0.4% in the second quarter of 2026 compared with the first quarter.
- Who
- Brazilian households, whose spending is forecast to slow.
- What
- Household consumption is expected to grow by around 1% in 2026 and less than that in 2027.
- When
- The forecast covers 2026 and 2027.
- Where
- Brazil.
- Why
- Economists cite high household debt and income commitments, weaker momentum in the labour market and credit, and a likely reduction in fiscal stimulus.
This story does not have two clearly opposing sides.
Expectations for GDP are slowing, and the main factor is weaker household consumption.
There was a 10-percentage-point drop in the unemployment rate in recent years, and that cannot be repeated.
That is a very strong figure to ignore.
There has been a break with historical behaviour and we are reaching stagnation.
Household consumption grew by an average of 3.3% a year in the post-pandemic period.
Household consumption grew by 1.3%, after rising 5.1% in 2024.
Household consumption fell 0.4% from the first quarter.
Household debt reached 49.9% and income commitments reached 28.7%, according to Brazil’s central bank.
Brazil’s debt-to-GDP ratio reached 82.9%, its highest level in five years.
- Share of GDP
- Household consumption accounts for 63%.
- Forecast for 2026
- Household consumption growth of around 1%.
- Forecast for 2027
- Growth below 1%; some economists see a risk of stagnation.
- Second-quarter change
- Consumption fell 0.4% from the first quarter.
- Household debt
- 49.9% in July.
- Debt-to-GDP ratio
- 82.9% in August, the highest level in five years.
Sources
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