Brazil’s economy expanded 0.5% quarter-on-quarter in the second quarter of 2026, slowing from 1.1% in the first quarter but beating market expectations of 0.4%, statistics agency IBGE reported. Agriculture surged 2.8% on strong soybean and coffee harvests, while services—about 70% of GDP—rose just 0.2% and industry edged up 0.1%, with extractive industries up 3.4% as manufacturing contracted. Household consumption fell 0.4%, its first decline in three quarters, even as government spending rose 0.4% and gross fixed capital formation increased 1.2%; the investment-to-GDP ratio stood at 16.1%. Annual GDP grew 2.0%, above a 1.8% consensus. Net foreign demand weighed after exports fell 0.8% and imports rose 1.8%. Inflation was 4.24% year-on-year in mid-August, above the central bank’s 3% target, with the policy rate still at 14% after easing began in March. More than 48% of adults appear on default registries, and the central bank’s IBC-Br activity index fell 0.6% in June, leaving a negative statistical carryover into the third quarter. The Finance Ministry said it will lower its full-year 2026 growth forecast of 2.3%, expecting the slowdown to persist through the third quarter before a gradual year-end recovery, as the data land ahead of October’s presidential election.