Brazil: IP plunged in June, bringing downside risks to our GDP growth estimates

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Brazil: IP plunged in June, bringing downside risks to our GDP growth estimates

J P M O R G A N Latin America Economic Research

04 August 2026

Brazil

IP plunged in June, bringing downside risks to our GDP

growth estimates

• Industrial production fell 1.8% m/m sa in June, well below expectations EM, Economic and Policy Research

• The weakness was broad-based across segments, leaving a negative statistical Vinicius Moreira

carry-over into 3Q (55-11) 4950-3195

vinicius.moreira@jpmorgan.com

• IP still grew 1.4% q/q saar last quarter, and our investment proxy grew slightly Mirella Sampaio

below 2% q/q saar when platform imports are excluded (55-11) 4950-3289

• Overall, our nowcaster is aligned with our 2Q GDP estimate of 2% q/q saar, but mirella.sampaio@jpmorgan.com

our disaggregated growth models suggest downside risks Gustavo Ribeiro

(55-11) 4950-4059

The June industrial production (IP) report delivered a sharp downside surprise and gustavo.ribeiro@jpmorgan.com

the weakest performance of the year. IP fell 1.8% m/m sa, well below our Banco J.P. Morgan S.A.

expectation of a 0.7% decline and the consensus of −0.9%, with mining down 0.6%

and manufacturing declining 1.8% (Figures 1 and 2). The weakness was broad-

based across segments, with consumer goods output particularly weak, down 3.7%

m/m sa likely due to weakening demand (Table 1).

This result reinforces the perceived deceleration in economic growth at the turn of

the quarter. Following this release, the nowcaster for 2Q fell and is now broadly in

line with our GDP growth estimate of 2% q/q saar (Figure 3). Our disaggregated

growth models, however, suggest downside risks to our 2Q GDP growth estimate,

particularly given that consumption indicators such as retail sales and services to