Shifting commercial relations, the convictions of Jair Bolsonaro and his associates, and the evolving agenda for the 2026 presidential elections dominate both headlines and concerns surrounding Brazil’s short-term outlook. Uncertainty remains elevated; nonetheless, the economy is performing relatively well. Growth is decelerating, but unemployment is at historic lows, and real incomes are proving resilient despite persistent inflation – bolstered in part by expansive public assistance programs and innovative credit expansion.

Inflation remains a challenge, yet high real interest rates – upheld by a vigilant Central Bank – have helped preserve policy credibility. Expectations point to further moderation in both economic activity and inflation, which is a positive development.

The perennial issue, however, is fiscal policy. Current frameworks for controlling public spending have proven ineffective – even counterproductive – particularly as real minimum wage increases continue without corresponding reforms to pensions or social assistance. Complex spending rules tied to earmarked revenues leave little room for budgetary adjustments. While new stratagems may make the 2025 fiscal target attainable, the outlook for 2026 appears well beyond reach, with the debt-to-GDP ratio projected to rise further.

This raises concerns about financial stability. Still, the market appears to accept that meaningful fiscal adjustments will only materialize after the elections. For now, as long as this uncertain equilibrium holds, the market is willing to continue funding the government.

Against this complex and shifting backdrop, our panel is well positioned to deliver an insightful and informed discussion on Brazil’s economic prospects.