Brazil's economic growth slows to 0.5% as agriculture offsets weak demand

Brazil's economy expanded 0.5% quarter-on-quarter in Q2 2026, slowing from a 1.1% rise in Q1 and delivering a 2.0% year-on-year gain as agriculture carried growth. The advance was led by the agricultural sector, which rose about 2.8% driven by soybeans, coffee, and cattle, while services inched up and industry barely grew. Household consumption contracted 0.4% in the quarter, and investment rose about 1.2%, signaling a mix of weakness for domestic demand alongside steadier investment. Exports fell 0.8% and imports rose 1.8%, contributing to a softer external position, even as gross domestic product reached around 3.4 trillion reais. The data arrives amid a tight monetary policy environment with borrowing costs remaining high, and comes as Brazil heads toward the October election that could influence policy directions and growth momentum. Analysts see the farm sector as a key driver this quarter, but warn the boost may fade if higher rates persist and policy signals remain unclear.