1. Federal government weighs measures to reduce spending

The federal government continues to discuss a package of measures to reduce public spending. These measures are essential to keep the fiscal framework operational and contain the rise of public debt. After three weeks of negotiations and no details being disclosed, tension in the financial market is high, with the dollar rising, the stock exchange falling, and interest rate futures increasing.

Although economists consider the spending cuts agenda urgent, sectors opposed to fiscal austerity fear harms to social policies. Academics and legislators have signed manifestos advocating for the revision or repeal of the fiscal framework, arguing that the preservation of social rights should be a priority. At the same time, the lack of concrete measures to reduce spending amplifies the so-called “fiscal risk,” boosting interest rates and complicating the balancing of public accounts. The government is challenged to find a middle ground between fiscal adjustment and maintaining policies that meet social demands.

G1: Corte de gastos: governo segue discutindo pacote nesta semana, em meio a pressão interna

2. IPCA rises 0.56% in October

The IPCA, Brazil’s official inflation indicator, rose by 0.56% in October, exceeding the market expectation of 0.53%. Over the past 12 months, the index reached 4.76%, above the Central Bank’s target ceiling of 3%, with a 1.5 percentage point tolerance range. This increase was primarily driven by the Housing (1.49%) and Food and Beverage (1.06%) sectors, with residential electricity prices rising 4.74% due to higher tariffs. Meat prices also saw a strong increase, accumulating a 5.81% rise over the month due to reduced supply and higher export volumes. On the other hand, the Transport sector saw a decline of 0.38%, influenced by a reduction in airfare costs.

With rising inflation and a shift in market expectations, the Central Bank raised the Selic rate to 11.25% per year, signaling concern over the inflationary outlook for 2024. Despite possible reductions in energy costs in November, other factors – such as rising service inflation and widespread price changes, which increased from 56% in September to 62% in October – continue to drive higher inflation. This scenario underscores the challenge of balancing inflation control with maintaining economic growth and household income.

CNN Brasil: IPCA acelera a 0,56% em outubro puxado por conta de luz, diz IBGE

3. Rio de Janeiro hosts the G20 to develop fairer and more sustainable global solutions

The G20, an international forum that brings together the world’s largest economies, will hold its 2024 summit this month in Rio de Janeiro. Established in response to the 2008 financial crisis, the group aims to foster global cooperation on economic, financial, and social issues. Its members include 19 industrialized countries and the European Union, as well as the newly incorporated African Union. Under Brazil’s rotating presidency, countries such as Angola, Egypt, Spain, and Norway have been invited to expand international dialogue on topics like climate change, anti-corruption efforts, sustainable development, and global economic stability.

With the theme “Building a Fair World and a Sustainable Planet,” Brazil’s presidency prioritizes issues like fighting hunger, poverty, and inequality, along with reforming global governance. The G20 structure is organized into two main tracks: the Sherpa Track, which leads policy preparation and negotiations, and the Finance Track, which focuses on macroeconomic issues. Brazil is working in partnership with India and South Africa in the G20 leadership troika, coordinating over 30 meetings and activities that encourage civil society participation in the group’s policy-making process.

Agência Brasil: Rio terá semana movimentada com eventos ligados ao G20
CNN Brasil: Brasil organiza reunião com maiores economias do mundo em 2024
Correio Braziliense: Lula recebe representantes do G20 Social no Planalto

4. Brazil sets new climate target

Brazil will present a new climate target at COP29 in Azerbaijan. The target, known as the Nationally Determined Contribution (NDC), commits the country to reducing greenhouse gas emissions by 59% to 67% by 2035, amounting to up to 1 billion fewer tons of carbon dioxide in the atmosphere. Aligned with the 2015 Paris Agreement, the proposal aims to limit global warming to 1.5ºC and advance climate neutrality by 2050. Vice President Geraldo Alckmin will lead the Brazilian delegation and deliver the new plan, which encompasses all economic sectors and leverages tools such as the Climate Fund and Sustainable Sovereign Bonds to finance the transition.

Despite the commitment, the target has faced criticism from organizations like Greenpeace Brazil, which considers it insufficient to address the global climate crisis. According to the NGO, the global reduction necessary to meet the Paris Agreement goals should be at least 60% of 2019 emission levels. Even so, Brazil’s presentation at COP29 marks an important step in its climate agenda and precedes the next summit, COP30, set to take place in Belém, Pará, in 2025.

Agência Brasil: Brasil vai anunciar nova meta climática na COP29

5. Volume of sales in retail fall short of expectations

Retail sales in Brazil grew by 0.5% in September, following a 0.2% drop the previous month, according to the Monthly Retail Trade Survey (PMC) from IBGE. Despite the positive performance, the result fell short of analysts’ expectations, who had projected a 1.4% increase. The “other personal and household items” sector contributed to most to the growth, with a 3.5% increase. Year-to-date, retail sales have risen by 4.8%, while growth over the past 12 months was 3.9%. The expanded retail sector, which includes vehicles and construction materials, performed better, with a 1.8% increase in September.

Economists note that, while the furniture and appliance sectors weighed down the overall figures, retail ended the third quarter with a solid 1% growth. This growth reflects the resilience of retail, supported by high disposable household income and credit access, despite tight monetary conditions and a strong dollar. Sales focused on essential items like food and medicine, while sectors such as furniture and apparel saw declines. The sector is expected to close the year with 4.6% growth, contributing to GDP expansion.

O Globo: Vendas do comércio crescem menos que o esperado em setembro, aponta IBGE