The Brazilian economy started 2026 at a stronger pace than observed at the end of last year. Data released this Friday (29) by the Brazilian Institute of Geography and Statistics (IBGE) shows that the Gross Domestic Product (GDP) grew 1,1% in the first quarter compared to the last three months of 2025.
The result represents a significant acceleration compared to the performance of the fourth quarter of last year, when the economy had registered an expansion of only 0,3%. It is also the best quarterly result in a year, since the 1,3% growth recorded in the first three months of 2025.
Performance was virtually in line with financial market expectations. A survey by Bloomberg indicated a median projection of a 1% increase, while estimates ranged from 0,6% to 1,7%.
According to IBGE, the main drivers of expansion were agriculture, the mining industry, and activities related to the service sector.
Robust harvest drives growth
Among the factors that contributed most to the economic growth is the performance of agribusiness, which is traditionally stronger at the beginning of the year due to the harvest of the main agricultural crops.
The positive impact of the grain harvest had a significant weight in the results from January to March, helping to offset some of the negative effects of still high interest rates on economic activity.
In addition to agriculture, growth in the extractive industry and service sectors reinforced the positive performance of the economy during the period.
Analysts note, however, that the boost generated by the agricultural sector tends to be more concentrated in the first months of the year, which could lead to a slowdown in growth in subsequent quarters.
The labor market sustains consumption.
Another factor cited as decisive for the outcome was the resilience of the labor market.
The beginning of 2026 was marked by Maintaining low unemployment rates and ensuring continued growth in workers' incomes.This scenario helped sustain household consumption, one of the main components of Brazilian economic activity.
Economists also attribute part of the performance to stimulus measures adopted by the federal government.
Among the highlighted initiatives are the expansion of credit availability, the policy of increasing the minimum wage, the maintenance of social programs, and the exemption from income tax for workers who earn up to R$ 5 per month.
According to Rodolpho Sartori, an economist at Austin Rating, the economy is currently experiencing a scenario of opposing forces.
"It's a tug-of-war. On one hand, there are the stimulus packages coming from the federal government, and on the other, an interest rate that stifles activity."
According to the expert, monetary policy continues to act as a brake on growth, despite incentives to stimulate demand.
Interest rates remain an obstacle.
Even with the expansion seen in the first quarter, the Brazilian economy is still grappling with one of the highest interest rate levels in recent years.
The Selic basic interest rate started 2026 at 15% per year. In March, it fell to 14,75% and, the following month, it was reduced to 14,5%.
Despite the downward trend, analysts believe that the process of reducing interest rates may face obstacles in the coming months.
In Sartori's view, high interest rates represent a "necessary evil" to contain inflationary pressures.
The scenario gained new challenges after the start of the war between Iran and Israel on February 28, a conflict that caused a sharp rise in international oil prices.
The increase in the price of oil directly impacted fuel prices and amplified concerns about inflation in Brazil.
Inflation worries the government in an election year.
Rising prices are seen as one of the main threats to the economy throughout 2026.
In addition to the war in the Middle East, experts point to the high level of household debt as a factor that could limit the growth of economic activity in the coming months.
Fuel inflation has become an additional concern for the federal government, especially as it occurs in an election year.
Given this scenario, the administration of President Luiz Inácio Lula da Silva has announced measures aimed at containing prices and preserving the purchasing power of the population.
At the same time, part of the financial market is showing concern about the possible effects of these stimuli on inflation and on the Central Bank's strategy to control rising prices.
Projections indicate moderate growth in 2026.
Despite the robust results in the first quarter, estimates for the economy's performance over the remainder of the year remain more moderate.
According to the most recent edition of the Focus bulletin, released by the Central Bank, the median market expectation is for GDP growth of 1,89% in Brazil in 2026.
The Ministry of Finance is working with a more optimistic projection, estimating growth of 2,3% by the end of the year.
The prevailing assessment among analysts is that the pace observed between January and March will be difficult to maintain in the coming quarters, especially given the cumulative effects of high interest rates and uncertainties in the international scenario.
Changes at IBGE mark the release of this announcement.
The release of this Friday's GDP figures also drew attention as it was the first to be carried out under the responsibility of the new National Accounts team at IBGE.
Earlier this year, the institute's president, Marcio Pochmann, implemented changes in the area responsible for calculating GDP.
Researcher Rebeca Palis has left her position as coordinator of National Accounts and has been replaced by civil servant Ricardo Moraes.
The change triggered an internal restructuring within the department, leading other technicians in the area to resign from their positions.
Despite the changes in staff, IBGE maintained the regular release of economic indicators and presented this Friday the first assessment of the performance of the Brazilian economy in 2026.
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