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COUNTRY INSIGHTS

Sizing up the trouble
BRAZIL ECONOMICS · Report · 31 Jul 2025

In a decree published this Wednesday, President Donald Trump raised the tariff on Brazilian products to 50%. Attached to the decree was a list of 694 products that will be exempt from the new tariff, including items such as orange juice, petroleum derivatives, certain steel products, cellulose, a...

The pause continued
BRAZIL ECONOMICS · Report · 31 Jul 2025

As expected, the Central Bank’s Monetary Policy Committee (Copom) kept the benchmark interest rate target at 15% per year. At the same time, however, in a curious grammatical construction, it stated that: “If the expected scenario materializes, the Committee foresees a continuation of the inte...

Selic, default, and consumption: what to expect?
BRAZIL ECONOMICS · Report · 29 Jul 2025

Consumption shows signs of slowing down in the second quarter, indicating that contractionary monetary policy is possibly already taking effect. The increase in the interest rate occurs in a scenario of high household indebtedness, which should exert additional pressure on default rates. Our ...

On the other hand...
BRAZIL ECONOMICS · Report · 21 Jul 2025

Economic activity shows signs of slowing down in the second quarter, which would suggest a narrowing of the output gap. However factor utilization is moving in the opposite direction: unemployment is declining and capacity utilization on the rise. One possible explanation for this divergence ...

The dark side of the moon
BRAZIL ECONOMICS · Report · 14 Jul 2025

The surprising imposition of 50% tariffs on Brazilian exports to the US is expected to have negative effects on economic activity, particularly on the manufacturing sector. The US absorbs 12% of Brazilian exports, accounting for just under 2% of GDP, but almost 18% of manufactured exports, equiva...

Rising tide
BRAZIL ECONOMICS · Report · 07 Jul 2025

The appreciation of the Brazilian real in 2025 has been accompanied by a similar movement in several other currencies, consistent with the global weakening of the U.S. dollar. When analyzing the real’s behavior against the basket of currencies that make up the Dollar Index, we observe only a mode...

The hand that rocks the cradle
BRAZIL ECONOMICS · Report · 07 Jul 2025

The release of Q1 GDP revealed certain imbalances in the economy. On the supply side, GDP was driven by the strong performance of the agricultural sector, which grew over 12% in seasonally adjusted terms and 10% compared to the same quarter in 2024. Meanwhile, industrial GDP shrank slightly by 0....

Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 30 Jun 2025

OVERVIEW IN SEARCH OF POLARIZATION  With his popularity in steady decline, loss of support in Congress, and Bolsonaro’s candidacy, the so-called "evil“, increasingly unlikely, Lula has decided to dust off the old rhetoric of the struggle between the rich and the poor, or the “upper floor” ...

Copom’s odyssey
BRAZIL ECONOMICS · Report · 25 Jun 2025

The main purpose of the latest Copom Minutes is to prevent the market from anticipating the beginning of the monetary easing cycle. The concern, naturally, is that market behavior could affect the yield curve and thereby undo part of the monetary tightening promoted by the Central Bank, which bro...

Fast and furious
BRAZIL ECONOMICS · Report · 23 Jun 2025

“In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.” — Rudiger Dornbusch In 1992, when asked what the campaign strategy for then-candidate Bill Clinton would be, advisor James Carville famously replied: “It’s the econom...

Promises, Promises
BRAZIL ECONOMICS · Report · 20 Jun 2025

In the end, the Copom opted for a final adjustment to the Selic target rate, raising it from 14.75% to 15.00% per year—an outcome that, while not exactly surprising, was still different from what most analysts (ourselves included) had expected. That said, a significant minority—perhaps one-third ...

Higher for longer?
BRAZIL ECONOMICS · Report · 16 Jun 2025

The Monetary Policy Committee (Copom) communication signals that the interest rate will be kept at a high level as long as necessary to bring inflation to the target midpoint and re-anchor expectations. However, we believe it is unlikely that the Central Bank will maintain real interest rates clo...

Some like it hot
BRAZIL ECONOMICS · Report · 09 Jun 2025

The labor market remains tight, as evidenced by the new drop in the unemployment rate in April, after three quarters of stability. Our estimates suggest that labor market-driven pressures are likely to persist for quite some time. Even considering the economic slowdown projected by the Centra...

Synthesis of the Brazilian Economy
BRAZIL ECONOMICS · Report · 02 Jun 2025

OVERVIEW THE MASKS COME OFF The series of crises generated by the Lula administration has shattered myths and exposed personal and systemic weaknesses. With no real plan for the country other than increasing public spending to keep the Workers' Party (PT) in power, the current model distor...

Anatomy of an imbalance
BRAZIL ECONOMICS · Report · 02 Jun 2025

GDP grew by 1.4% in the first quarter compared to last of 2024 in seasonally adjusted terms, slightly below the average market forecast of 1.5%. Compared to the same period last year, it grew 2.9%, also slightly below expectations. There were no surprises in terms of growth breakdown: as antic...

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