Business · Economy · 2 hrs ago
Itaú and Bradesco cut Brazil's 2027 growth forecasts
Itaú and Bradesco expect Brazil's economy to grow less in 2027, the first year of Lula's new term.
Itaú forecasts 0.5% growth and 6.1% inflation, while Bradesco expects 0.4% growth and 5.3% inflation.
Both banks point to high interest rates, heavy debt and fading stimulus as drags on growth.
They also cite possible inflation pressures from fuel tax changes, a weaker currency, tax reform and a shorter working week.
The central question is whether the government uses the downturn to fix public finances, which could help lower risk, inflation and interest rates over time.
In 2003, Lula's first government tightened fiscal policy, and growth picked up to more than 5% the following year.
Without lasting changes, weak growth could become a prolonged stretch of high rates and rising public debt, while choices about appointments to Brazil's central bank may also affect confidence.
Itaú cut its forecast for Brazil’s 2027 GDP growth to 0.5%, from 1.2%, and raised its inflation forecast to 6.1%, from 4.6%.
Bradesco lowered its 2027 growth forecast to 0.4%, from 1%, and raised its inflation forecast to 5.3%, from 4.1%.
Both banks cited prolonged high interest rates, heavy household and business debt, and fading economic stimulus as factors holding back growth.
They also pointed to potential inflation pressures, including fuel tax changes, a weaker currency, tax reform and a shorter working week.
- Who
- Itaú and Bradesco, Brazil’s two largest private banks.
- What
- Both cut their forecasts for Brazil’s 2027 economic growth and raised their inflation forecasts.
- When
- Itaú issued its report on October 30, 2026. Bradesco revised its forecasts on Friday, November 6, 2026.
- Where
- Brazil.
- Why
- The banks cited prolonged high interest rates, heavy household and business debt, fading stimulus and inflationary pressures.
This story does not have two clearly opposing sides.
During Lula’s first government, the administration raised the primary surplus target and the central bank raised interest rates; GDP grew just over 1%.
Brazil’s GDP grew more than 5%.
Itaú cut its 2027 GDP growth forecast to 0.5% and raised its inflation forecast to 6.1%.
Bradesco cut its 2027 GDP growth forecast to 0.4% and raised its inflation forecast to 5.3%.
- Itaú 2027 GDP forecast
- 0.5%, down from 1.2%
- Itaú 2027 inflation forecast
- 6.1%, up from 4.6%
- Bradesco 2027 GDP forecast
- 0.4%, down from 1%
- Bradesco 2027 inflation forecast
- 5.3%, up from 4.1%
- Inflation target ceiling
- 4.5%