Living on borrowed time

BRAZIL ECONOMICS - Report 15 Jun 2026 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

The economic outlook changed considerably over the second quarter of the year. Much of this, of course, reflected the depth and duration of the geopolitical crisis in the Strait of Hormuz. If the U.S. government expected the Iranian regime to capitulate quickly, particularly after eliminating its leadership, it must have been greatly disappointed. Iran’s response, obvious in retrospect, was to close the strait, through which roughly 20% of the global oil supply normally flows, in addition to fertilizers and gas, triggering a significant supply shock.

Higher oil (and gas) prices simultaneously imply weaker global growth and increases in prices affected in some way by the oil supply chain. The IMF revised down its outlook for global economic growth in both 2026 and 2027 and also projects higher inflation.

The impact is obviously not symmetrical across countries. Net oil exporters tend to suffer less in terms of economic activity, although, as we will see, they are not immune to the effects on prices.

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