The Ministry of Finance forecasts a 1.7% decline in the agricultural sector’s GDP in 2024, in contrast to the broader economy’s expected growth.
According to the Macrofiscal Bulletin released on Monday (November 18) by the Secretariat of Economic Policy, the new projection slightly improves upon the previous estimate of a 1.9% contraction. Adjustments were made following updated production forecasts for wheat, oranges, coffee, cotton, and sugarcane, alongside improved expectations for livestock slaughter in Q3 2024.
Performance in 2024
The Ministry estimates that the agriculture sector experienced a slight growth of 0.2% in Q3 compared to Q2, revising its earlier forecast of a 0.5% decline. Compared to Q3 2023, the sector’s GDP is expected to grow by 1.2%.
However, challenges persist. Revisions lowered sugarcane and coffee production estimates due to drought and fires, while orange production declined due to greening, a disease affecting citrus plants. Meanwhile, better-than-expected results in livestock and cotton harvests provided some relief.
Despite these improvements, the Ministry anticipates a 1.6% annualized contraction for the agricultural sector by September 2024. This follows a 2.3% decline from Q1 to Q2 and a 2.9% drop compared to Q2 2023.
Optimistic Outlook for 2025
Looking ahead, the Ministry projects a 6% expansion in agricultural GDP for 2025. This rebound is expected to counteract slower growth in the industrial and service sectors.
The forecast is based on the IBGE’s initial estimate for the 2025 harvest, which anticipates a record-breaking soybean crop. The recovery also reflects a reversal in the cattle expansion cycle seen between 2022 and 2024.
Overall Economic Outlook
For the broader economy, the Ministry expects a 3.3% GDP growth in 2024, exceeding the 3.1% consensus among financial market analysts polled by the Central Bank.
Beyond 2024, steady economic growth is projected, with GDP increases of 2.5% in 2025, 2.6% in 2026 and 2027, and 2.5% again in 2028.
The Ministry emphasized that these projections are conservative and could outperform expectations depending on productivity gains and efficiency improvements from the Ecological Transformation Plan and tax reform. Additionally, growth in renewable energy and oil exports could enhance Brazil’s economic potential in the coming years.
