Brazil’s Ministry of Finance raises its estimate for agricultural GDP growth in 2026 from 0.5% to 1.2%.

The Economic Policy Secretariat (SPE) of the Ministry of Finance released this Friday (March 13th) the macroeconomic parameters for March and preliminary estimates of the impacts of the conflict in the Middle East on the Brazilian economy. The expectation of GDP growth at 2.3% in 2026 was maintained; exactly the same level as in the schedule released in February. According to the SPE, the recent rise in oil prices increases the expected Brazilian growth by about 0.1 percentage point (mainly because the country is currently the fifth largest oil producer in the world and a major exporter). However, this impact of oil-driven growth was counterbalanced by the reduction in the carry-over of the industry for 2026, as determined after the release of the 2025 GDP results. Thus, by balancing these factors, the SPE maintained its forecast of 2.3% GDP growth for this year. “Even in the face of the oil price shock, the macroeconomic outlook for 2026 remains favorable,” stated the Secretary of Economic Policy, Guilherme Mello, in a virtual press conference held this Friday. In the scenarios simulated by the SPE and presented in the interview, the rise in oil prices positively impacts Brazilian economic activity, the trade balance, and tax revenue, only generating more pronounced inflation in the case of a “disruptive shock” (the most extreme scenario, with the persistence of the conflict and the price of oil reaching an annual average above US$100 per barrel of Brent). Guilherme Mello reinforced that the expectation for 2026, even with the conflict in the Middle East, is that Brazilian growth will remain resilient, that inflation will continue to fall, and that the target for the primary surplus will be achieved. “In the Brazilian case, a major factor we need to keep in mind is that Brazil has become a net exporter of oil. Since 2016, we have had a growing surplus in the oil and fuel account. This is important because countries that are net importers, dependent on imports, generally have much more severe negative impacts on key variables such as inflation, trade surplus, growth, etc.,” said Mello. The opposite is true for countries with a surplus in the oil sector (such as Brazil), explained Mello, including positive factors in the economy, such as improvements in the trade balance, increases in royalty collections, special participations, and taxes. “It is true that surplus countries also suffer inflationary impacts from more expensive oil. However, they have a greater capacity to mitigate these effects,” the secretary detailed. The SPE also presented this Friday the Macroeconomic Panorama for March 2026, a broad set of economic data, organized by the SPE from various publicly accessible primary sources. The Undersecretary for Macroeconomic Policy, Raquel Nadal, explained that the main change in the new parameter grid (compared to the data released in February) involves the incorporation of exogenous variables, mainly the increase in the price of oil. The parameter grid released by the SPE in February considered an average oil price of US$66 per barrel for the entire year. The March grid considers a price of US$73.1 per barrel (an increase of approximately 11%). As for the exchange rate, the February grid considered a rate of R$5.43 per dollar; a level that has now been updated to R$5.32 per dollar (an appreciation of about 2%). For inflation, the SPE considers the Broad National Consumer Price Index (IPCA) of 3.7% in 2026. For the National Consumer Price Index (INPC), the estimate is 3.8% for this year. Under the General Price Index – Domestic Availability (IGP-DI), there is a forecast of fluctuation of 4.9% for this year. There was a rearrangement in the percentage contributions of each sector of the economy, resulting in a projected GDP growth of 2.3% for 2026 (percentage maintained in relation to the February schedule). In February, growth of 2.3% was estimated for industry, realigned to 2.2% in the February schedule. For agriculture, in February there was a projection of a 0.5% increase, readjusted to a 1.2% increase in the March schedule. For the services sector, the estimate of a 2.4% increase was maintained, the same level present in the February schedule. Raquel Nadal highlighted that the domestic scenario presents positive factors, such as the recent increase in the soybean harvest forecast and the expansion of Brazilians' purchasing power, driven by the income tax exemption for those earning up to R$ 5,000 per month. The negative focus comes from the external scenario, notably the intensification of the crisis in the Middle East, as the increase in the price of oil and chemical products generates pressure on inflation, both for fuels and agricultural fertilizers. "Iran is a major exporter of urea to Brazil," the undersecretary pointed out. :: Scenarios The Secretary of Economic Policy (SPE), Guilherme Mello, presented the details of the expected impacts on the Brazilian economy from the conflict in the Middle East, taking into account various intensity scenarios. "Our effort was to construct some alternative scenarios for different Brent price levels. Of course, this will depend on the duration of the conflict, on the characteristics that this conflict will assume over time," said the head of the SPE. The first scenario is that of a temporary shock. This is the current situation, considering a 10.8% increase in the Brent crude oil price compared to the February price, leading to an estimated average price of US$73.1 per barrel for the year. Under this perspective, the SPE projects, for 2026, a 0.10% increase in GDP; a 0.14 percentage point increase in consumer inflation; a US$2.5 billion increase in the positive trade balance; a 1.1% currency appreciation; and a R$21.4 billion increase in the Central Government's net revenue. The second scenario, that of a persistent shock, estimates a 24.2% increase in the Brent crude oil price compared to the February price, or an average of US$82 per barrel, considering the consolidated figures for the year. In this scenario, there would be a 0.23 percentage point increase in GDP; a 0.33 percentage point increase in inflation; and a US$5.1 billion increase in the trade balance. A 2.3% currency appreciation and R$ 48.3 billion growth in the Central Government's net revenue are projected. The most extreme scenario projected is a disruptive shock, considering a 51.5% increase in the Brent crude oil price compared to the values used in the February grid. That is, an average price of US$ 100 per barrel for the year. In this case, GDP growth would be 0.36 percentage points and inflation 0.58 percentage points. The disruptive shock scenario would also lead to a positive increase of US$ 10.3 billion in the trade balance surplus; a 4.5% currency appreciation and an increase in the Central Government's net revenue of R$ 96.6 billion. All the scenarios outlined do not consider the impacts of the set of measures announced on Thursday (March 12) by the Federal Government to contain the rise in diesel oil prices in the domestic market, warned the SPE team. The measures should generate a reduction of R$ 0.64 per liter of diesel, at refinery prices. “We are considering all of this as if there were no effect from the public policies,” warned the Secretary of Economic Policy. “If these policies are successful in mitigating the increase in fuel prices, this also has an impact on reducing inflationary pressure,” he added. Guilherme Mello warned that, in the event of even more disruptive scenarios, increased uncertainty and risk aversion tend to harm global trade and growth, leading to stagflation, which could harm Brazilian growth. The secretary also stressed that the impact of more extreme variations in oil prices on activity and inflation is not linear. “Obviously, Brazil is not immune to the negative effects of a global crisis,” the secretary emphasized. The Undersecretary of Fiscal Policy of the SPE, Débora Freire, also participated in the interview. 

This text was translated by machine from Brazilian Portuguese.