Brasil
August 22nd, 2025
1. Legal uncertainty drags down Brazilian bank stocks
Shares of Brazil’s largest banks lost R$41.3 billion in market value after Supreme Court Justice Flávio Dino’s remarks regarding the Magnitsky Law. The possibility of imposing penalties on financial institutions that comply with foreign sanctions against Justice Alexandre de Moraes has heightened perceptions of legal uncertainty. The impact was immediate: Banco do Brasil dropped more than 6%, while Santander, Bradesco, Itaú, and BTG also posted steep declines. The stock exchange closed down 2.10%, and the dollar rose 1.23%, reaching R$5.50.
The situation places banks in a dilemma between meeting the requirements of the global financial system and complying with Supreme Court rulings, which could trigger sanctions and additional costs. Analysts note that the crisis reinforces investors’ risk aversion and puts pressure on the sector, considered a cornerstone of Brazil’s market. The lack of clarity about the Magnitsky Law’s effects in the country further fuels tensions and raises concerns about the integration of domestic institutions into the international system, at a time when the Brazilian currency is already being influenced by expectations over the Federal Reserve’s monetary policy.
Folha de S. Paulo: Bancos caem na Bolsa e perdem R$ 41 bi em valor de mercado após sinalização de Dino sobre Lei Magnitsky
2. Inflation falls below 5% for the first time in 2025
The Central Bank’s Boletim Focus showed that the inflation forecast for 2025 dropped from 5.05% to 4.95%. This is the first time this year that the projection has fallen below 5%. Despite 12 consecutive weeks of downward revisions, the index still remains above the upper limit of the monetary authority’s target range. For 2026, estimates also declined for the fifth straight week, from 4.41% to 4.40%. Projections for 2027 and 2028 remain stable, at 4% and 3.80%, respectively.
On the economic growth side, GDP forecasts for 2025 and 2026 were maintained at 2.21% and 1.87%, while the 2027 estimate saw a slight adjustment from 1.93% to 1.87%. The Selic rate is expected to close 2025 at 15% and fall to 12.5% in 2026. The exchange rate projection remains at R$5.60 for 2025, hovering around R$5.70 between 2026 and 2028, reflecting a scenario of currency stability despite external uncertainties.
Exame: Boletim Focus: mercado vê inflação abaixo de 5% pela primeira vez no ano
3. President Lula resumes discussions on Big Techs
President Luiz Inácio Lula da Silva (PT) will send two bills to Congress aimed at regulating digital platforms. One focuses on rules for the use of these services, while the other establishes economic guidelines addressing competition among major technology companies, known as Big Techs.
The proposal is expected to be presented next week, after Lula’s trip to Colombia, and still depends on progress in the vote on the “Adultization Bill” in the House of Representatives. The debate gained momentum following influencer Felca’s complaint about the exposure of children and teenagers on social media. On Monday (Aug 18), the president reiterated his defense of regulation as a way to combat crimes in the digital environment.
Before formally introducing the bills, Lula plans to meet with representatives of Meta, Google, and TikTok in Brazil to present the draft on social media regulation.
Metrópoles: Lula decide enviar dois projetos de lei para regulação das big techs
CNN Brasil: Governo vai reunir big techs antes de enviar regulamentação ao Congresso
4. Chamber of Deputies approves fast-track for income tax exemption
The Chamber of Deputies has approved the urgency regime for a bill that expands the income tax exemption to salaries of up to R$5,000 per month. The measure speeds up the review process and could take effect as early as 2026, benefiting around 10 million taxpayers. Those earning between R$5,000 and R$7,350 will receive a gradual tax discount, covering an additional 500,000 people.
To offset the drop in revenue, the bill includes higher rates for top earners. The tax will apply to those earning more than R$600,000 per year, with rates reaching up to 10% for incomes above R$1.2 million annually. The change is expected to impact approximately 141,000 high-income taxpayers.
5. New letter from COP30 president urges stronger country commitments
COP30 president, Ambassador André Corrêa do Lago, released his sixth letter to the international community, highlighting preparations for the conference. The initiative seeks to avoid deadlocks like the one at the Bonn meeting in June, when countries attempted to reopen debates outside the agenda, delaying negotiations by two days.
The letter stresses the need to address core issues in tackling the climate crisis. Among them are raising ambition in climate commitments, ensuring a just transition away from fossil fuels, and securing global financing. The conference report is expected to outline a pathway to mobilize US$1.3 trillion annually and assess the impact of new national targets (NDCs) on global warming.
Valor Econômico: Sexta carta da presidência da COP30 busca dar transparência ao processo e incluir temas fora da agenda
O Globo: Em nova carta, presidente da COP30 diz que 80% dos países membros do Acordo de Paris não têm novas metas para reduzir emissões