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    Brazil’s GDP in the third quarter rises to 1.8%, exceeding the expected 1.7%

    by VT Markets
    /
    Dec 4, 2025
    Brazil’s Gross Domestic Product (GDP) grew by 1.8% year-on-year in the third quarter, topping the expected growth of 1.7%. This stronger-than-anticipated growth signals a more robust economy, which could influence future economic policies.

    Investment Strategies

    Given Brazil’s faster-than-expected economic growth, this is a good chance to invest in domestic assets. A smart move would be to buy call options on the Ibovespa index in the coming weeks. This positive surprise hints that the market hasn’t fully accounted for the economy’s strength. This growth also makes the Brazilian Real more appealing. We should explore strategies that take advantage of a stronger currency, like selling USD/BRL futures that expire in early 2026. Historically, when we’ve had a hawkish central bank and positive growth surprises in 2023, the currency appreciated significantly. The strong growth adds pressure on the central bank, making interest rate cuts less likely. The latest IPCA-15 inflation rate from November, at 4.2%, suggests the central bank might be cautious about lowering the Selic rate from its current level of 9.75%. We should consider interest rate swaps that bet on higher rates staying around for a while.

    Sector Performance

    Looking at the stock market, the GDP growth seems to be driven more by the service sector than by commodities. We recommend focusing on banking and retail stocks over miners like Vale, especially since iron ore prices are steady at about $115 per tonne. Selling out-of-the-money puts on these domestic companies could be a smart way to earn premiums. As we approach late 2025, this situation mirrors the post-pandemic recovery, where domestic demand often surprised on the upside. The market underestimated consumer strength several times, and we expect a similar trend into early 2026. This historical perspective supports our belief in holding long positions in Brazil-focused ETFs. Create your live VT Markets account and start trading now.

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