Brazil's economic activity expands 2.5% in 2025 as agriculture cushions slowdown, central bank says

By Marcela Ayres

BRASILIA, Feb 19 (Reuters) - Brazil's economic activity expanded 2.5% in 2025, central bank data showed on Thursday, easing from the previous year's pace ?but once again surpassing initial forecasts with the ?help of a booming farming sector.

The reading was based on the central bank's ?IBC-Br index, widely regarded as a proxy for gross domestic product. ?The indicator is compiled from estimates for agriculture, industry and ?services, as ?well as production-related taxes.

On a non-seasonally adjusted basis, excluding the robust 13.1% surge in agriculture, ?the index would have risen ?1.8% in 2025.

Official GDP figures are due on March 3.

Economists surveyed weekly by the central bank project a 2.3% ?GDP expansion for 2025, slowing ?from the ?3.4% recorded the previous year, in the context of an ultra-tight interest rate environment aimed at taming inflationary pressures.

At the beginning ?of 2025, however, economists had projected a more modest 2.0% ?rise in GDP.

The central bank halted an aggressive tightening cycle in July that had lifted the benchmark Selic rate by 450 basis points, and has since kept it unchanged at 15%, its highest level ?in ?nearly two decades.

Policymakers flagged an upcoming easing cycle ?starting next month.

"Activity ended 2025 on a soft note, reinforcing the ?case for easing ahead," Andres Abadia, chief LatAm economist at Pantheon Macroeconomics, said in a note to clients, pointing to activity stabilizing at low levels following a mid-year deceleration across sectors.

In December, the IBC-Br index fell a seasonally adjusted 0.2% from the previous month, a smaller drop than the 0.5% decline expected ?by economists polled by Reuters.

In the fourth quarter, the index rose 0.4% from the prior three months, with positive readings across ?all sectors except industry, central bank ?data showed. (Reporting by Marcela Ayres; Editing by ?Alex Richardson and Joe Bavier)