Brazil's current strong economic growth is unsustainable over the medium term due to continued low savings and investment and increasing uncertainty about the fiscal outlook, which will force the government to take more forceful adjustment measures in the next two to three years. According to the International Monetary Fund, Brazil's real gross domestic product grew by 3% in both 2022 and 2023, and real GDP is expected to have grown another 3% in 2024, marking an acceleration after over a decade of significant economic underperformance. This growth is supported by strong domestic consumption, increased agricultural and hydrocarbon output, and a pro-cyclical fiscal policy, which describes the government's tendency to increase spending (or reduce taxes) during periods of economic expansion. However, the IMF projects that Brazil's gross government debt will increase substantially from 85% of GDP in 2023 to 95% of GDP by 2027, and fiscal deficits are also high, amounting...
