1. Government announces spending cuts package with an estimated impact of R$ 327 billion from 2025 to 2030

The Ministry of Finance has announced a package of spending revision measures, with an estimated impact of R$ 71.9 billion in 2025 and 2026. For the period from 2025 to 2030, the total estimated impact reaches R$ 327 billion.

The goal of the spending cuts package is to uphold the so-called fiscal framework, the rule governing public accounts approved last year. Without a credible rule for managing public finances, economists explain, there will be a further increase in public debt, which could affect bank interest rates for consumption and investment, create tension in the markets, and exert pressure on the dollar.

With greater confidence in controlling public spending and maintaining fiscal rules in the coming years, there is a trend toward reduced pressure on the dollar and inflation – factors that directly impact the lives of Brazilians. For the proposed changes in the package to take effect, they still need to be approved by the National Congress.

Valor Econômico: Governo estima impacto de R$ 327 bilhões com medidas de revisão de gasto entre 2025 e 2030
Exame: Governo Lula prevê R$ 327 bilhões de economia até 2030 com pacote fiscal
Carta Capital: Conheça os detalhes do plano de ajuste fiscal anunciado pelo governo federal

2. Dollar reaches R$ 6 following announcement of spending cuts and income tax exemption

On Thursday (28), the dollar reached its highest level since the Real Plan was introduced: R$ 6. The amount surpasses the previous intraday record (during active trading hours) of R$ 5.97 on May 13, 2020, at the height of the pandemic.

The surge in the dollar followed the announcement of a package of measures, including an income tax exemption for those earning up to R$ 5,000 starting in 2026. Analysts believe this measure will have a fiscal impact that will offset part of the spending cuts anticipated in the other initiatives.

Economists and market experts were critical of Finance Minister Fernando Haddad’s announcement. According to them, the proposed measures were modest and the “bundled” presentation of changes to income tax brackets not ideal. While the market acknowledged the measures as positive steps, there was skepticism about their ability to generate R$ 70 billion in savings over two years. Concerns were raised that much of this amount may rely on fraud control and prevention rather than structural reforms with medium and long-term effects.

O Globo: Dólar hoje: cotação sobe com força e alcança R$ 6
CNN: Mercado reage a Haddad com críticas a timidez para cortar gasto e timing de mudança no IR

3. JPMorgan downgrades recommendation for Brazilian stocks

JPMorgan has downgraded its allocation in Brazil from “overweight” to neutral, even though Brazilian stock valuations remain attractive. The bank describes Brazil as experiencing an eternal “Groundhog Day”, a phrase used to convey the feeling of reliving the same situation repeatedly. According to the bank’s experts, slower growth in China is expected to impact Brazil by driving down commodity prices, which could hinder global flows into emerging markets, particularly those considered “China proxies”.

While maintaining a neutral outlook on Brazilian equities, JPMorgan analysts expressed above-market-average optimism for certain stocks, including Eletrobras, Sabesp, Itaú, Porto Seguro, Stone, Nu, Raia Drogasil, and JBS. Conversely, the bank holds an “underweight” recommendation for commodity-related stocks.

Valor Econômico: J.P. Morgan diz que Brasil vive ‘eterno dia da marmota’ e rebaixa recomendação para ações do país
Folha de São Paulo: JPMorgan diz que Brasil parece viver dia da marmota com risco fiscal e rebaixa recomendação para ações locais

4. Brazilian job market slows down in October

In October, 132,714 formal jobs were created in Brazil, according to data from the General Register of Employed and Unemployed (CAGED), released by the Ministry of Labor and Employment. This was the weakest result for the month since 2020 and a 29% drop compared to the same period last year, which saw 187,070 new jobs created. The Minister of Labor attributed the slowdown in October’s labor market to high interest rates, a measure implemented by the Central Bank to curb inflation.

For the year to date, from January to October, the balance stood at 2,117,473 jobs. Over the past 12 months, from November 2023 to October 2024, 1,787,839 positions were created, representing a 22.7% increase compared to the November 2022 to October 2023 period.

While sectors such as services, industry, and commerce continued generating jobs, agriculture and construction posted negative results.

O Globo: Brasil abre 132.714 mil postos de trabalho em outubro, pior resultado para o mês desde 2020

5. Brazil aims for green waterway corridor in the Amazon by 2027

Brazil plans to establish its first green waterway corridor in the Amazon by the end of 2027. Named Enguia (Eel), after the electric fish, the project will promote investments in clean energy for river transportation, involving both private and public sectors. The initiative aims to develop 100% electric boats powered by solar energy, using national technology, and make them commercially available at affordable prices for the local population.

The primary goal is to reduce greenhouse gas emissions and encourage the adoption of clean energy in river transport. This represents a significant step toward sustainability, especially as COP30 approaches in Belém, highlighting Brazil’s commitment to transitioning to a greener economy and preserving the Amazon.

Beyond environmental benefits, the green waterway corridor is expected to have positive social and economic impacts in the region, improving access to basic services and driving local development.

Folha de SP: Brasil pode ter primeiro corredor verde fluvial na Amazônia até 2027