REGRESA

1. Financial market lowers inflation forecast for 2025

The Focus Bulletin, released by the Brazilian Central Bank, showed a new downward revision in the inflation forecast for 2025, from 5.57% to 5.55%. This is the second consecutive drop in analysts’ projections. However, the rate remains above the upper limit of the continuous inflation-targeting system, which allows for a range between 1.5% and 4.5%. If the ceiling is breached for six consecutive months, the Central Bank is required to formally justify the failure to meet the target to the Ministry of Finance.

The GDP growth expectation for 2025 remains unchanged at 2%, while the benchmark interest rate (Selic) is still projected at 15% per year for the same period. This scenario highlights the Central Bank’s ongoing challenge of balancing interest rates with inflation control, taking into account that policy effects are typically felt six to eighteen months down the line. Despite the slight relief in inflation estimates, the outlook remains concerning, especially given inflation’s direct impact on the population’s purchasing power.

G1: Boletim Focus: mercado reduz estimativa de inflação para 2025 pela 2ª semana seguida, para 5,55%

2. Unemployment rises in Q1, but labor market shows resilience

Brazil’s unemployment rate rose to 7% in the first quarter of 2025, according to data released by the national statistics agency (IBGE) on Wednesday (March 30). The increase, anticipated by analysts, reflects a seasonal trend typical at the start of the year, driven by the end of temporary jobs and a rise in workers seeking new opportunities. Despite the uptick, this is the lowest unemployment rate for a first quarter since the Continuous PNAD survey began in 2012. The rise was mainly due to a decline in informal jobs, while the average income of employed workers reached a record high of R$3,410.

The drop in the number of employed people, down to 102.5 million, was largely driven by informal employment losses, accounting for 1.3 million fewer jobs compared to the previous quarter. Of those losses, 85% came from jobs without formal contracts or business registration. The informal employment rate fell from 38.6% to 38%. Meanwhile, the number of formally employed workers in the private sector remained stable at 39.4 million, near an all-time high. Informality fell most sharply in the construction, domestic services, and education sectors.

Despite the rise in unemployment, the labor market continues to show signs of strength, mainly due to gains in formal employment, which boost income and help sustain household consumption, one of the key drivers of Brazil’s GDP.

Folha de S.Paulo: Desemprego sobe a 7% no primeiro trimestre, e renda volta a bater recorde

3. Public accounts post R$1.1 billion surplus 

The central government of Brazil recorded a primary surplus of R$1.1 billion in March 2025, the best result for the month since 2021. This outcome far exceeded market expectations, which had forecasted a deficit of R$3.5 billion, according to the Finance Ministry’s Prisma Fiscal survey. The strong performance was driven by a R$24 billion surplus in the accounts of the National Treasury and Central Bank, which offset a R$23 billion deficit in Social Security. Compared to March 2024, net revenue saw a real increase of 0.8%, while total expenditure fell by 0.5%.

Key contributors to the positive result included higher income tax collections on labor earnings and income from residents abroad, as well as a reduction in both mandatory and discretionary spending, particularly in health and the Bolsa Família program. On the downside, there was a significant drop in dividend payments from Caixa Econômica Federal and in non-tax judicial deposits, while spending on social security benefits and unemployment insurance rose due to the minimum wage adjustment and seasonal factors.

In the first quarter of 2025, the central government posted a primary surplus of R$54.5 billion, more than double the amount recorded in the same period of 2024. This improvement is largely attributed to a near-total reduction in court-ordered debt payments (precatórios), which fell by R$30.95 billion, alongside a 2.7% increase in net revenue and a 3.4% decrease in total spending. Strong income tax revenue, social security contributions, and transfers from the Fundef/Fundeb education funds also contributed to the strong start to the year.

CNN Brasil: Contas do Tesouro têm melhor março desde 2021, com superávit de R$ 1,1 bi

4. BRICS backs UN reform and voices concern over global conflicts

The BRICS foreign ministers and sherpas meeting held in Rio de Janeiro marked the beginning of preparations for the bloc’s heads of state summit, scheduled for July. During the meeting, Brazil’s Foreign Minister Mauro Vieira emphasized the group’s role in promoting the reform of multilateral institutions, particularly the United Nations Security Council. He stated that the current global landscape, shaped by humanitarian crises, armed conflicts, and political instability, demands collective action and stronger multilateralism, areas where BRICS can play a strategic role.

Vieira voiced deep concern over the conflicts in Gaza and Ukraine, calling for diplomatic solutions to both crises. He condemned Israeli airstrikes and the obstruction of humanitarian aid, reiterating Brazil’s support for a two-state solution. Regarding Ukraine, he urged for a resolution grounded in the UN Charter, despite the presence of Russian Foreign Minister Sergey Lavrov. Vieira also referenced instability in Haiti and parts of Africa, reinforcing Brazil’s support for diplomatic efforts and sustainable development. In addition to the multilateral meetings, Vieira held bilateral talks with representatives from countries such as Russia, Ethiopia, Thailand, and Indonesia.

G1: Reunião de sherpas do Brics começa com pedido de reforma da ONU e preocupação com Gaza e Ucrânia

5. 2025/26 sugarcane harvest declines, but sugar output hits record

Brazil’s sugarcane production for the 2025/26 season is projected at 663.4 million tons, a 2% decrease compared to the previous cycle, according to the National Supply Company (CONAB). The decline is primarily due to adverse weather conditions in the Southeast region, especially in São Paulo, where drought, high temperatures, and wildfires severely impacted sugarcane fields. While the planted area remained virtually unchanged (up just 0.3%), average yield dropped by 2.3%, reaching 75,451 kg/ha.

In other regions, outcomes varied. The Center-West, Brazil’s second-largest producing region, is expected to see a slight increase of 2.1% in output, driven by expanded planted area despite declining productivity. The South should maintain stable production, while both the North and Northeast are projected to see gains in both yield and planted area. The outlook is particularly positive in the Northeast, where production is expected to reach 56.3 million tons, with a 3.6% increase in productivity.

Despite the overall decline in cane production, CONAB forecasts a record sugar crop of 45.9 million tons. Ethanol production, on the other hand, is expected to fall by 1%, totaling 36.82 billion liters. This drop is mainly due to a 4.2% decline in sugarcane-based ethanol, partly offset by an 11% increase in corn-based ethanol. Brazil’s competitiveness in the global market remains strong, with robust export prospects and growing corn ethanol output contributing to energy diversification and helping stabilize domestic fuel prices.

Agência Brasil: Conab estima produção de 663,4 milhões de toneladas de cana