Brasil

VOLVER

1. Market lowers inflation forecast for 2025

Financial market economists have revised their inflation estimate down for this year while maintaining their projection for the growth of Brazil’s economy. The forecast for the National Broad Consumer Price Index (IPCA), the country’s official inflation indicator, dropped from 5.24% to 5.20% for 2025. Despite the decrease, the IPCA remains well above the inflation target ceiling of 4.5%.

The market’s projection for Gross Domestic Product (GDP) growth in 2025 remained unchanged at 2.21%. For 2026, the GDP growth estimate rose slightly from 1.85% to 1.87%. Regarding the benchmark interest rate (Selic), the market maintained its expectation at 15% per year, the current level of the base interest rate. This projection suggests a potential stabilization or slight decline in future interest rates, reflecting market confidence in the ongoing slowdown of inflation.

G1: Boletim Focus: mercado reduz estimativa de inflação em 2025 pela 5ª semana seguida, para 5,20%
Agência Brasil: Mercado financeiro reduz previsão da inflação para 5,2%

2. Industrial production drops 0.5% in May

Industrial production fell by 0.5% in May compared to the previous month but grew 3.3% year-over-year, according to data from the Brazilian Institute of Geography and Statistics (IBGE). The result aligns with market expectations, which had anticipated a decline following the growth observed in previous months.

Despite the monthly drop, analysts view May’s result as a natural adjustment after recent gains. The industrial sector remains a key indicator of economic performance, and expectations for the coming months will help determine whether this dip is merely a short-term correction or the beginning of a broader trend. The sector’s resilience, demonstrated by accumulated growth, remains a point of interest.

CNN Brasil: Produção industrial no Brasil cai 0,5% em maio, conforme esperado, diz IBGE
InfoMoney: Setores mais sensíveis recebem o golpe de juros altos e produção industrial tem queda

3. IDB announces US$11 billion investment in Latin America

The Inter-American Development Bank (IDB) will invest US$11 billion in sustainable development projects in Latin America and the Caribbean. The initiative aims to boost the energy transition, climate change adaptation, and the promotion of a greener economy in the region. The amount represents a significant effort to support Latin American countries in their environmental and social commitments.

To this end, the IDB now has three new programs to support sustainable development. The Amazonia Bonds turn investors’ concerns about transparency into investment, with clear standards on how the resources are used, monitored, and reported. FIRRe transforms disaster exposure into financial protection, expanding coverage for governments and companies when shocks occur. FX Edge offers a set of tools to turn one of the oldest and most urgent barriers to investment – exchange rate volatility – into resilience and unlocked capital.

The funds will be directed to a variety of projects, including renewable energy, resilient infrastructure, sustainable agriculture, and water resource management. The expectation is that these investments will contribute to job creation, improved quality of life, and the building of a more sustainable future for the countries involved.

O Globo: BID prevê US$ 11 bi em investimentos a projetos para desenvolvimento sustentável na América Latina

4. High interest rates in the Safra Plan may undermine investment

The 2025/2026 Safra Plan met expectations but came with higher interest rates than in previous years. Annual rates of 8.5% may make the numbers unworkable for many rural producers. In this scenario, the expectation is that producers will prioritize funding for operational costs over investments, except for improvements deemed essential for crops, in an effort to limit borrowing at high cost.

According to an analysis by the technical advisory team of the Brazilian Confederation of Agriculture and Livestock (CNA), with interest rates at this level, the profitability of several crops and livestock activities may be compromised, making investments less attractive or even unfeasible. The rise in interest rates could slow technological development and the adoption of more sustainable practices, which require initial investment. The expectation is that the government will reconsider credit conditions for the sector in order to strike a balance that encourages production and ensures the country’s food security.

Globo Rural: Juros de 8,5% do Plano Safra podem inviabilizar investimento de produtores, dizem consultorias

5. IOF Crisis: Supreme Court evaluates conciliation

The Federal Supreme Court (STF) is evaluating a possible conciliation to resolve the delicate crisis triggered by its decision to invalidate the collection of the IOF (Tax on Financial Operations) on credit operations carried out between 2014 and 2017. The ruling, which could have a multibillion-dollar impact on public finances, with estimated losses ranging from R$ 80 billion to R$ 200 billion, has put the government on high alert. Justice Luiz Fux, the case’s rapporteur, has indicated a search for an agreement that would avoid a fiscal shortfall while still upholding legal certainty.

The complexity of the situation lies in the fact that the STF based its decision on the absence of a supplementary law to regulate the tax, rendering its collection unconstitutional during the specified period. However, the financial impact of potentially refunding the amounts already collected is enormous. The conciliation proposed by the STF aims to find a middle ground, possibly by limiting the effects of the ruling to future cases or by setting a deadline for the National Congress to pass the necessary supplementary law, thus minimizing damage to public coffers.

Folha de São Paulo: STF vê situação delicada e avalia conciliação para crise do IOF