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COUNTRY INSIGHTS

What goes around, comes around (with interest)
BRAZIL ECONOMICS · Report · 27 May 2025

The Bimonthly Revenue and Expenditure Report indicates that the National Treasury’s financing need in 2025 will reach BRL 76 billion, BRL 47 billion above the amount originally projected in the Annual Budget Law (LOA). Despite official rhetoric, it is clear that the government’s goal is merel...

Beyond the horizon
BRAZIL ECONOMICS · Report · 19 May 2025

The Central Bank has likely come to the end of the monetary tightening cycle, or has reached very close to it, even as its own inflation forecasts remain above target for the relevant horizon. Moreover, these forecasts—highly dependent on demand behavior—still appear optimistic, based on the assu...

Blow hot and cold
BRAZIL ECONOMICS · Report · 14 May 2025

The minutes from last week’s Copom (Monetary Policy Committee) meeting sounded more ambiguous than the statement released at the time. The tone of the original document, which by design is much less detailed than the minutes, suggested a high probability that the Committee would opt to maintain t...

All eggs in one basket
BRAZIL ECONOMICS · Report · 12 May 2025

The appreciation of the Brazilian real in 2025 is good news for inflation control. However, the total impact of this appreciation on prices seems to depend on the real’s dynamics against currencies other than the dollar. Although most Brazilian imports are denominated in U.S. dollars, export pric...

“Everyone has a plan until they get punched in the mouth”
BRAZIL ECONOMICS · Report · 08 May 2025

Copom provoked no surprise with its decision to hike the target for the benchmark interest rate by 0.50 percentage points, from 14.25% to 14.75% per year. However, more than the decision itself, the main interest of “Copom Watchers” lay in the possible signaling regarding the next steps in moneta...

Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 05 May 2025

OVERVIEW Lula's plans face a hostile reality The Lula administration has found its helmsman in marketing strategist-turned-minister Sidônio Palmeira, making it clear that everything will be done to ensure the PT remains in power beyond 2027. This plan, however, will face serious challenges,...

Inflation: bad now, higher uncertainty ahead
BRAZIL ECONOMICS · Report · 28 Apr 2025

In recent months, there has been an acceleration in underlying inflation measures and an increase in the diffusion index. Industrial goods prices have also accelerated, reflecting the depreciation of the real throughout 2024. Since exchange rate pass-through occurs with a lag, it is possible that...

Exports: macro vs micro
BRAZIL ECONOMICS · Report · 22 Apr 2025 · 1 response

The WTO projects a 0.2 % drop in global trade volume in 2025, and the decline could be larger if reciprocal tariffs materialize—prompting downward revisions to Brazil’s export outlook. In addition, a slowing world economy is likely to push many commodity prices lower, as seen in recent weeks. The...

Requiem for the fiscal framework
BRAZIL ECONOMICS · Report · 17 Apr 2025

The federal government has sent the Budget Guidelines Bill (PLDO) for 2026 to Congress, outlining the broad contours of next year’s budget, as well as projecting public accounts through the middle of the next administration, in 2029.

Collateral damage
BRAZIL ECONOMICS · Report · 14 Apr 2025

Trump’s economic policy is expected to cause a global economic slowdown. Despite the considerable uncertainty regarding the magnitude of this deceleration, it is reasonable to assume that global economic activity will perform below projections made just a few weeks ago. We estimate the impacts of...

Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 07 Apr 2025

OVERVIEW ROUGH SEAS DEMAND A GOOD CAPTAIN The seismic effects triggered by Trump’s actions will still cause considerable damage until a new equilibrium can be reached. From tariffs calculated “on the back of the envelope” to the systematic assault on democratic institutions, the country is...

Yellow lights flashing
BRAZIL ECONOMICS · Report · 31 Mar 2025

The inflationary scenario remains challenging despite some signs of economic slowdown. The economy is expected to continue operating at full employment, maintaining inflationary pressure, as revealed by its underlying indicators. In the labor market in particular, the slow adjustment of the un...

For whom the bell tolls?
BRAZIL ECONOMICS · Report · 26 Mar 2025

The Copom Minutes from last week's meeting revealed a rather hawkish tone regarding inflation prospects, suggesting that—even in the absence of guidance for meetings beyond May—the monetary tightening cycle is unlikely to end in the next meeting. We maintain the view expressed in our commentar...

Global uncertainty and local risk
BRAZIL ECONOMICS · Report · 24 Mar 2025

Uncertainty is the key term when it comes to the economic outlook. While there are still significant domestic challenges, the biggest concerns stem from the global scenario, reflecting the radical shift in U.S. policy with the beginning of Trump’s second administration. Although changes in tra...

Cards close to the chest
BRAZIL ECONOMICS · Report · 20 Mar 2025

As expected, the Copom raised the Selic target rate from 13.25% to 14.25% per year, citing the adverse inflation scenario, reflected in still-elevated projections. Regarding its next moves, the Committee signaled its intention—should the expected scenario materialize—to persist with the monetary ...

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