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1. Lula signs 2026 budget with vetoes and spending blocks

President Luiz Inácio Lula da Silva signed the 2026 Annual Budget Law with vetoes totaling around R$ 400 million in congressional amendments. Lula also announced blocks on approximately R$ 11 billion in funds, the allocation of which would have been determined by Congress. The total federal budget amounts to R$ 6.54 trillion, with about R$ 50 billion reserved for amendments. According to the Presidential Palace, the vetoes affect provisions added during the legislative process that were not in line with current law and the rules of the fiscal framework.

The decision comes amid the government’s effort to rebuild relations with the Chamber of Deputies and the Senate, as well as the typical pressures of an election year. Chief of Staff Rui Costa stated that the blocked amounts exceed the limit agreed upon between the Executive and Legislative branches, which restricts the growth of amendments to inflation adjustment and a real increase of up to 2.5%. Despite the cuts, the budget provides for increased funding for areas such as education and health and projects a primary surplus of R$ 34.2 billion, even with expanded public spending in 2026.

InfoMoney: Lula sanciona Orçamento de 2026 com vetos a R$ 400 milhões em emendas parlamentares

2. US tariff on Iran’s trading partners raises alarm for Brazilian trade

US President Donald Trump announced the immediate imposition of a 25% tariff on all trade transactions with the United States carried out by countries that maintain business ties with Iran. The measure, disclosed on social media, did not specify whether it will affect existing contracts or only new operations, creating uncertainty among governments and companies.

Brazil may be impacted by the decision, as it maintains a significant trade relationship with Tehran, especially in the agribusiness sector, even though Iran is not among Brazil’s top 20 global trading partners.

In 2025, bilateral trade between Brazil and Iran totaled nearly US$ 3 billion. Brazilian exports reached US$ 2.9 billion, mainly concentrated in corn, soybeans, and sugar, while imports amounted to around US$ 84.5 million, with fertilizers, urea, pistachios, and raisins standing out.

G1: Trump anuncia tarifa de 25% aos países que fizerem negócios com o Irã; Brasil pode ser afetado
Agência Brasil: Brasil movimentou quase US$ 3 bi em comércio com Irã em 2025

3. World Bank forecasts slower growth for Brazil in 2026

Brazil’s economy is expected to grow by 2% in 2026, according to the World Bank’s projection released in the Global Economic Prospects report. The estimate indicates that there will be a slowdown in 2026 compared to 2025, when GDP expanded by 2.3%. Brazil’s outlook mirrors the trend seen across emerging markets, whose growth is expected to slow to 4% next year, despite an upward revision from previous forecasts, influenced by fiscal stimulus and increased exports to markets outside the United States.

Globally, the World Bank projects growth of 2.6% in 2026, slightly below 2025 levels, but still supported by stronger-than-expected performance of the US economy. US GDP is expected to grow by 2.2%, backed by fiscal incentives, despite the negative effects of tariffs on investment and consumption.

Despite greater resilience in the global economy, the institution warns that growth remains concentrated in wealthier countries and is insufficient to reduce extreme poverty, with the risk that the 2020s will become the weakest decade for global expansion since the 1960s.O Globo: Banco Mundial reduz previsão e Brasil deve crescer 2% este ano, aponta relatório

4. Financial market raises inflation forecast and stock Exchange hits new all-time high

The financial market once again revised its inflation expectations for 2026 upward, according to the Boletim Focus edition released by Brazil’s Central Bank. The IPCA projection increased, while estimates for GDP, exchange rate, and the Selic interest rate remained stable for this year and for 2027. This movement reinforces analysts’ more cautious outlook on inflation, amid fiscal uncertainties and market sensitivity to economic policy in the next presidential cycle.

Despite inflation concerns, the Brazilian stock market performed strongly on Wednesday (14) and set a new all-time high, closing at 165,145 points, up 1.95%. In the foreign exchange market, the US dollar rose 0.48% on the same day and closed at R$ 5.40, reflecting a combination of external factors, geopolitical tensions, and investor position adjustments.

Exame: Boletim Focus: mercado aumenta projeção da inflação de 2026
Folha de S.Paulo: Bolsa renova recorde e chega a 165 mil pontos pela primeira vez, com pesquisa eleitoral e exterior em foco

5. Holidays expected to cause R$ 17 billion loss to São Paulo retail in 2026

Retailers in the state of São Paulo are expected to lose around R$ 17 billion in revenue in 2026 due to holidays, optional workdays, and extended breaks on weekdays, according to estimates by FecomercioSP. This figure represents a 13.9% increase compared to 2025, equivalent to an additional R$ 2.1 billion in losses, reflecting a higher number of dates that disrupt normal retail operations.

According to the organization, the impact corresponds to about 1.1% of the sector’s annual revenue, estimated at R$ 1.5 trillion, and is likely to weigh more heavily on small retailers. The segments most affected are those dependent on impulse purchases. On the other hand, FecomercioSP assesses that sectors such as tourism, bars, restaurants, and transportation are expected to benefit from extended holidays, while planned purchases, such as vehicles and household appliances, tend to be merely postponed, without an actual loss of revenue.

Valor Econômico: FecomercioSP estima perda de R$ 17 bi com feriados