Brazil anticipates higher growth and more inflation due to oil price surge from Iran war
The Brazilian government anticipates that the rise in oil prices caused by the war in Iran will have mixed effects on the country's economy in 2026, with a possible increase in GDP growth, but also higher inflation, according to a study released this Friday. In the most likely scenario, with a moderate and temporary 11% increase in the Brent crude price to about $73, the government estimates that Brazilian GDP growth could increase by an additional 0.10 percentage points in 2026, while inflation would rise by an additional 0.14 points, according to the Ministry of Finance study. In this case, Brazilian growth would reach 2.4% in 2026, above the initially projected 2.3%, while inflation would stand at 3.8%, compared to the 3.7% forecast so far, according to the calculations.
TL;DR
- Brazil's government forecasts mixed economic effects from oil price increases due to the Iran war in 2026.
- Higher oil prices could boost GDP growth by up to 0.36 percentage points and inflation by up to 0.58 points in severe scenarios.
- Brazil's status as a net oil exporter is expected to positively impact its trade balance and tax revenue.
- Increased fuel costs, especially diesel, may lead to higher domestic prices and potentially higher interest rates.
- Global economic slowdown caused by the conflict could also dampen growth.