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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 ...

The path of disinflation: between desire and reality
BRAZIL ECONOMICS · Report · 17 Mar 2025

The Central Bank has signaled its understanding that the economy needs to slow down for inflation to converge to the target. In this report, we attempt to estimate the growth rate that aligns with the Central Bank’s scenario, particularly the path that moves from a positive output gap of 0.7% at ...

Webinar Replay - Debt and deficits in emerging markets: South Africa, Indonesia and Brazil - The good, the bad and the ugly?
BRAZIL ECONOMICS · Report · 14 Mar 2025

Visit our calendar page to watch the replay of our webinar featuring Iraj Abedian (South Africa), Alexandre Schwartsman (Brazil), and Cyrillus Harinowo (Indonesia) discussing public debt in these key emerging economies and where the good, the bad and the ugly of emerging markets fiscal policymak...

Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 10 Mar 2025 · 1 response

OVERVIEW HARVESTS OF A PT ADMINISTRATION FOR THE PT The devastating decline in Lula’s popularity consolidates his worst moment across all his terms, with the gap between those who disapprove (49%) surpassing, for the first time, those who approve (47%) of his government. According to data f...

Lower growth; higher risk
BRAZIL ECONOMICS · Report · 07 Mar 2025

GDP growth in the last quarter of 2024 came out below expectations. Although a certain slowdown was already anticipated, in ligt of high-frequency data previously released, output expansion in the period reached only 0.2%, compared to an average forecast of around 0.4% and very close to the lower...

Time is the master of reason
BRAZIL ECONOMICS · Report · 24 Feb 2025

The appreciation of the Brazilian real at the beginning of 2025, close to 7.6%, partially reversed the exchange rate depreciation process observed throughout last year, which had intensified in December. This movement at the beginning of the year followed the weakening of the U.S. dollar in t...

The perils of Penelope
BRAZIL ECONOMICS · Report · 18 Feb 2025

Copom’s current balance of risks highlights the asymmetry toward upside inflation risks, including economic overheating, given the positive output gap—one of the fundamentals of the current interest rate hike cycle. Economic slowdown and the consequent reduction of the output gap, thus reducing i...

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