Lawyers warn proposed bill restricts court-ordered debt payments

“Precatórios” measure already passed by lower house and under Senate review is deemed unconstitutional under STF rulings

 

 

 

07/18/2025

The proposed constitutional amendment (PEC) 66, approved by Brazil’s Chamber of Deputies and now under review in the Senate, imposes limits on court-ordered debt payments (precatórios) by states and municipalities, tying payouts to a fixed percentage of net current revenue (RCL). According to legal experts, the proposal effectively reinstates a cap on these judicial debts, a framework the Federal Supreme Court (STF) has already ruled unconstitutional. Municipalities, however, argue the measure is lawful and necessary to ensure fiscal predictability.

The proposal establishes a tiered repayment system based on the size of a government’s outstanding precatório stock relative to its previous year’s RCL. If the total debt amounts to up to 15% of the RCL, the government must allocate 1% of its RCL annually to precatório payments. For debts between 15% and 25%, the allocation rises to 1.5%, scaling up progressively to 5% for debts exceeding 85% of RCL.

Under current law, valid through 2029, governments are required to deposit one-twelfth (1/12) of their RCL annually to cover precatório payments.

Felipe Sarmento, acting president of Brazil’s National Bar Association (OAB), said the organization is prepared to challenge the PEC in the STF “to defend the rights of lawyers, businesses, and any individuals with precatórios owed by the state.”

Vitor Boari, chair of OAB São Paulo’s Special Committee on Precatórios, confirmed that the state chapter is preparing to file an injunction request if the PEC is enacted. Among lawyers, the proposal has been dubbed the “default PEC.”

“Before the vote, we warned that the substitute text contradicted multiple STF rulings on the same issue,” Mr. Boari said. He noted that the São Paulo city government currently allocates R$4.8 billion annually to precatório payments, which would fall to R$2.4 billion under the new scheme. “If they can’t clear the backlog with R$4.8 billion, they certainly won’t with R$2.4 billion, which is why the PEC includes a ten-year review clause — but that won’t fix the problem,” he said.

Gilberto Perre, executive secretary of the National Front of Mayors (FNP), argues there is no constitutional violation. “We are applying the legal concept of the ‘reserve of the possible,’ meaning the state must operate within the limits of its finite resources. This cap gives governments predictability and planning capacity,” Mr. Perre said.

He noted that precatórios are imposed by the Judiciary, leaving municipalities without control over the amounts, which can unexpectedly strain budgets. Without a payment cap, Mr. Perre warned, essential services could deteriorate, and municipal investment capacity would be impaired.

Mr. Perre also defended the PEC as a long-term solution that would prevent Congress from repeatedly passing stopgap measures to extend payment deadlines. “This is the most intelligent and organized approach we’ve seen to tackle this issue,” he said.

Tax law experts have also criticized changes to payment discount rules and indexation. Currently, creditors can accept up to a 40% discount for early payment; the PEC removes this ceiling. It also modifies how precatórios are adjusted for inflation. “They are trying to forcibly erode precatório values over time,” Mr. Boari said.

States and municipalities have already benefited from precatório repayment extensions under constitutional amendments 30 (2000) and 62 (2009), both partially overturned by the STF. Amendment 30 allowed debts to be paid over ten years but was ruled unconstitutional in 2010. Amendment 62 established a special repayment regime of up to 15 years, which the STF declared unconstitutional in 2013 but partially upheld through 2020 after modulating the decision’s effects.

“STF rulings have consistently made it clear that no rule enabling indefinite payment of these debts will stand,” said Marco Antonio Innocenti, partner at Innocenti Advogados and head of the Precatórios Studies Commission of the São Paulo Lawyers Institute. Innocenti warned that the PEC risks sending an already managed debt into complete disarray.

“When the STF strikes down a rule, it is removed from the legal system and cannot be reintroduced by Congress, not even via constitutional amendment,” Mr. Innocenti argued, stressing that this is a well-established precedent affecting individual creditors.

The National Committee of State Finance Secretaries (Comsefaz) counters that PEC 66 is not harmful to creditors, as it merely reorganizes the payment schedule and states can pay more than the minimum thresholds if fiscal space permits.

*By Beatriz Olivon and Jéssica Sant’Ana — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Brazil sets new monthly record for beef exports

The volume of exports in June reached 341,550 tonnes, up 41%

 

 

 

07/18/2025

Brazilian beef exports soared to a record high in June, reaching 341,550 tonnes, a 41% increase year over year, the Brazilian Association of Meatpackers (Abrafrigo) reported Thursday, citing federal data. This figure surpassed the previous monthly record of 319,290 tonnes set in October 2024.

June export revenues jumped 55% to $1.505 billion. In the first half of the year, total beef and byproduct exports generated $7.446 billion in revenue, up 28%, with volumes rising 17.3% to 1.69 million tonnes.

China remains Brazil’s top customer, importing 631,900 tonnes in the semester—an 11.3% increase in volume and 27.4% growth in revenue, which totaled $3.204 billion. The U.S., the second-largest buyer, significantly expanded its imports by 85.4% in volume and 99.8% in revenue, purchasing 411,700 tonnes worth $1.287 billion between January and June.

China accounted for 43% of Brazil’s beef export revenues and 37.4% of volumes in the period. The U.S. share was 24.4% of volume and 17.3% of revenue.

However, the outlook has darkened following the U.S. decision to impose a 50% tariff on Brazilian beef starting August 1. According to Abrafrigo, the measure could cost the Brazilian cattle industry around $1.3 billion.

*By Nayara Figueiredo, Globo Rural — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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National Treasury sees debt peaking by 2028

Fiscal Projections Report estimates debt-to-GDP ratio will hit 84.3% in three years before easing from 2029

 

 

 

07/17/2025 

Brazil’s National Treasury projects a deterioration in the trajectory of gross general government debt (DBGG), forecasting a peak in 2028 at 84.3% of gross domestic product (GDP), with a decline beginning only in 2029, when it is expected to fall slightly to 84.1%.

The updated projections were released in the Treasury’s Fiscal Projections Report published yesterday. In its previous forecast, from December, the Treasury had projected the debt-to-GDP ratio would peak earlier, in 2027, at 81.8%, and start declining in 2028 to 81.6%.

The latest report also projects a 2.5 percentage point increase in the debt-to-GDP ratio this year compared to the 2024 figure, which closed at 76.5%. For 2025, the Treasury expects the debt ratio to reach 79%.

According to the Treasury, the worsening debt path is “mainly explained by the level of nominal interest rates, which continue to exert upward pressure on debt in the coming years.” However, projected GDP growth is expected to partially offset the increase.

“The projections consider scenarios involving the Central Bank’s liquidity management operations, particularly factors affecting the monetary base, such as cash currency operations, reserve requirements (mandatory or voluntary), and liquidity lines,” the report noted.

The report also states that, under the current fiscal framework, a primary surplus of 2.3% of GDP per year starting in 2030 would be necessary to bring the debt-to-GDP ratio back to 76.5% by 2035.

While the Treasury’s outlook has worsened, market forecasts are even more pessimistic. According to the latest data from the Central Bank’s Market Expectations System, the DBGG is expected to reach 80.1% of GDP this year and 94% by 2034, with no stabilization in sight.

Tiago Sbardelotto, an economist at XP Investimentos, emphasized that the Treasury’s projections represent a “baseline scenario,” meaning they assume primary surplus targets are met, along with substantial revenue growth throughout the period.

“This shows how even a slight deterioration in the macroeconomic outlook, like marginally higher interest rates, could push the debt onto a sharply rising trajectory and delay any stabilization,” Mr. Sbardelotto said.

In the Treasury’s initial scenario, which strictly considers fiscal forecasts based on current legislation, the debt-to-GDP ratio would reach nearly 90% by 2035, without stabilizing.

“What the report shows is that even under optimistic assumptions, reversing the rising debt trend will be difficult in the short term within the new fiscal framework,” Mr. Sbardelotto added. “To change this trajectory, we would need a macroeconomic and fiscal shock, requiring serious reforms to control spending,” he said.

The Treasury projects that the central government’s primary result will remain in surplus at 1.25% of GDP through 2035.

This scenario assumes favorable growth in primary revenues driven by measures to increase tax collection, along with a gradual decline in total spending as a percentage of GDP. It also assumes the government will meet primary surplus targets set in the 2026 Budget Guidelines Bill (PLDO), including a zero deficit in 2025, followed by surpluses of 0.25% of GDP in 2026, 0.5% in 2027, 1.0% in 2028, and 1.25% in 2029.

On the revenue side, the report forecasts net primary revenue to rise to 19.1% of GDP in 2029 and 2030 before declining from 2032 onwards, reaching 17.5% in 2035.

Primary expenditures, meanwhile, are expected to fall from 18.8% of GDP in 2025 to 16.3% in 2035 in the baseline scenario. This decline is projected to begin in 2027, accelerating as court-ordered government debt payments (precatórios) are fully included under the spending cap. However, the lower house passed a bill yesterday, with government backing, to phase in precatórios under the fiscal target starting in 2027 over a ten-year period—a change not reflected in the Treasury’s projections.

The report also accounted for the recent decree raising Financial Transactions Tax (IOF) rates. However, on Wednesday, Supreme Court Justice Alexandre de Moraes suspended the IOF on certain receivables financing transactions.

Additionally, the Treasury notes that with mandatory spending projected to grow at an average real rate of 2.9% per year, there will be a reduction in discretionary spending, which can be freely adjusted.

Finally, the Treasury warned that all projections are based on the assumptions used in the Second Revenue and Primary Expenditure Evaluation Report and on macroeconomic forecasts from May 2025 by the Economic Policy Secretariat of the Ministry of Finance. Any changes in these assumptions will lead to different projections.

*By Guilherme Pimenta and Jéssica Sant ‘Ana — Brasília

Source:  Valor International

https://valorinternational.globo.com/markets/news/2025/07/17/national-treasury-sees-debt-peaking-by-2028.ghtml

 

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Analysis: New licensing framework ignores climate crisis

Scientists, business leaders, and environmentalists call licensing bill worst environmental rollback in Brazilian history

07/17/2025 

In the entirety of Bill 2,159/2021—legislation designed to overhaul Brazil’s environmental licensing process—the word “climate” does not appear once. This omission serves as a telling indicator of the bill’s intent. Proponents, especially conservative factions within agribusiness, mining, and industry, frame the bill as a modernization effort. But its complete disregard for the ongoing climate emergency signals a step backward, enshrining outdated principles and representing, according to environmentalists and scientists, one of the most severe socio-environmental regressions in the country’s history.

“Apparently, climate isn’t considered relevant for a law that’s fundamental to Brazil’s environmental protection system,” says Suely Araújo, former president of the Brazilian Institute of Environment and Renewable Natural Resources (Ibama) and current public policy coordinator at the Climate Observatory, Brazil’s largest coalition of organizations focused on climate and development. “It’s shameful, especially in 2025. This is a law designed to be obsolete from birth.”

The Brazilian Society for the Advancement of Science (SBPC) is among the many civil society organizations—including industry and commerce groups alongside environmentalists, Indigenous peoples, Quilombola communities, and other traditional groups—opposing what they call the “Destruction Bill.” Backed by over 160 organizations, SBPC issued a manifesto outlining the bill’s effects according to scientific consensus: it weakens the mechanisms for analyzing, controlling, and supervising potentially destructive and polluting projects.

Of Brazil’s six major biomes, four—Amazon, Cerrado, Pantanal, and Caatinga—are approaching irreversible tipping points. “Crossing these thresholds could trigger ecological collapse, destroying ecosystem services essential to life,” scientists warn. They recommend halting native vegetation destruction, combating wildfires and environmental degradation, and urgently scaling up restoration efforts. These recommendations stand in stark contrast to the bill’s deregulatory agenda.

The criticisms don’t stop there. In addition to endangering key biomes, the bill undermines the Atlantic Forest Law—protecting a biome that has already lost 76% of its original cover—and is incompatible with Brazil’s climate commitments under the Paris Agreement. Its approval would also undercut Brazil’s leadership aspirations ahead of COP30, scheduled for November in Belém.

Critics point to several dangerous and controversial provisions. The bill exempts a wide range of agricultural activities from environmental licensing, regardless of their environmental impact. It shifts responsibility onto developers by allowing medium-sized projects with moderate pollution potential to receive automatic approval based on self-declaration. Even worse, oversight of these licenses would rely on random sampling.

Such provisions may sound plausible in an ideal world—not in Brazil, where efforts are ongoing to protect standing forests, enforce environmental laws, and safeguard Indigenous and Quilombola communities from forced displacement caused by infrastructure projects.

The bill also excludes important input from non-licensing agencies such as Funai (the Indigenous affairs agency), ICMBio (biodiversity conservation), and Iphan (cultural heritage). Moreover, it detaches licensing from water usage rights, ignoring crises like those in the Cerrado, where over half of municipalities have seen surface water supplies drop by 30%. Nearly 80% of Quilombola territories and 32% of Indigenous lands—awaiting legal recognition—would be disregarded in the licensing process.

Researchers Júlia Benfica Senra and Gesmar Rosa dos Santos highlight further risks. The bill presumes state and municipal authorities have the capacity to assess environmental impacts, which is far from the case. “The bill recognizes real deficiencies in the system but exacerbates them,” says Ms. Senra. “It lowers the bar when it should be raising it.”

*By Daniela Chiaretti — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Brazil faces hurdles replacing Russian diesel supply

Russia became top supplier in 2023, offering discounted fuel

 

 

 

07/17/2025

Brazil could struggle to find alternative diesel suppliers if the United States imposes new sanctions on Russia, experts told Valor. Russia has been the country’s leading diesel source since 2023, offering the fuel at discounted prices amid international trade restrictions.

On Tuesday (15), NATO Secretary-General Mark Rutte warned that countries such as Brazil, China, and India could be affected by secondary sanctions threatened by U.S. President Donald Trump. The proposed measure would impose 100% tariffs on nations buying from Russia, unless Russian President Vladimir Putin agrees to a peace deal in Ukraine within 50 days.

From January to June, Russia was Brazil’s top diesel supplier, accounting for $2.5 billion in exports, according to data from Brazil’s Ministry of Development, Industry, and Foreign Trade (MDIC). The United States ranked second, with $1 billion. Currently, domestic production meets 70% of Brazil’s diesel demand, with the remaining 30% filled through imports.

According to Felipe Perez, an analyst at S&P, Brazil would face difficulties sourcing diesel elsewhere amid already tight global inventories. “If tariffs are extended to fuels, U.S. diesel will become less competitive for Brazil. India could be an option, but it is also a major importer of Russian diesel and could be subject to the same sanctions,” he said. Mr. Perez said Nigeria and Middle Eastern countries remain potential suppliers, though high freight costs and limited volumes could make them less viable.

Russia emerged as a key player in Brazil’s diesel imports in 2023, after Western sanctions over the war in Ukraine shut the country out of its traditional markets. To attract new buyers, Russia offered discounted fuel, prompting increased purchases by Brazil, India, and China.

That same year, Moscow temporarily halted diesel and gasoline exports to contain domestic price spikes, as crude oil prices neared $100 per barrel. The short-lived export ban heightened global concerns over the reliability of Russian supply, which is rarely governed by long-term contracts.

According to MDIC, Brazil set a record in 2023 by importing $4.5 billion in diesel from Russia. That trend has continued into 2024, with Russian diesel purchases totaling $5.4 billion—well ahead of the $1.4 billion in imports from the U.S. For comparison, in 2022, Russian diesel accounted for just $95 million in Brazilian imports, ranking Russia eighth among suppliers. That year, the U.S. led the list, with $8 billion in sales.

Sergio Araujo, president of the Brazilian Association of Fuel Importers (ABICOM), said Brazil will likely face a challenge in finding an alternative supplier that can meet its needs. The situation would worsen, he said, if sanctions also affect China and India, creating global demand that outpaces supply. “That scenario would shake up the market. The U.S. could be an alternative, but I’m not sure U.S. refineries have the capacity to scale up production enough,” said Mr. Araujo. “If global supply falls short, prices will surge, adding pressure to inflation.”

ABICOM members importing Russian diesel are waiting to see if Mr. Trump’s threats materialize. According to an industry source, most Russian diesel buyers in Brazil are independent operators.

Asked for comment, Acelen, the owner of the Mataripe refinery in Bahia, said it does not purchase Russian diesel. Raízen declined to comment, while Vibra did not reply to Valor’s request for comment.

Petrobras also said it does not buy crude oil or refined products from Russia. In a statement, the state-run company said diesel imports are driven by market conditions. “Petrobras’s global operations, through its international trading subsidiaries, allow it to import from a range of suppliers, primarily from the U.S., India, and the Persian Gulf region.”

Thiago Vetter, an analyst at StoneX, sees NATO putting pressure on Brazil and other nations, but said the likelihood of sanctions being enforced remains low. “I consider the chance of secondary tariffs on Russian buyers remote, given the importance of these markets to the U.S. economy,” he said. In his view, even if Russian diesel were cut off, there is little risk of a fuel shortage in Brazil. Companies could replace Russian diesel, but it would come at a higher cost, he added.

*By Kariny Leal  — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

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Leadership gap reflects racial inequality in workplace

Experts call for structural changes as Black professionals remain underrepresented at the top

 

 

07/15/2025 

Although Black Brazilians represent 55.5% of the population, according to the official statistics agency IBGE, they hold just 9.7% of top leadership roles—defined as executive management and above. The data comes from a study carried out between 2022 and 2025 by Diversitera, a consulting firm that analyzed approximately 70 companies across various sectors and sizes.

According to Jaime Almeida, vice president of the FESA Group—an HR solutions ecosystem—and director of diversity and inclusion at the São Paulo chapter of the Brazilian Association for Human Resources (ABRH-SP), this underrepresentation has historical roots.

“It hasn’t been long since the so-called ‘pseudo liberation’ of Black people after slavery, so they still haven’t been able to access spaces like universities and, as a consequence, are underrepresented in leadership roles,” he said.

He added that only 0.4% of executive board positions are held by Black women, according to the Ethos Institute. “That’s even more disgraceful when you consider they are the largest demographic group in the country. It’s impossible to see that as normal,” he said.

Mr. Almeida also cited a 2018 McKinsey report: “Companies with gender equity are about 21% more profitable than the sector average. Those with racial and ethnic equity show roughly 33% higher profitability,” he noted.

To change this scenario, Mr. Almeida recommends that companies begin by conducting a demographic survey of their workforce. Once they understand their internal makeup, he advised sharing this data with senior leadership. “By developing training programs for executives, we can encourage real reflection and help the company define where it wants to go—over the next year, five years, ten years. How it wants to transform itself,” he said.

In his view, racism often begins with the discomfort some people feel when they see professionals who don’t fit the traditional mold of white leadership in positions of power. “A Black person who is assertive is perceived as aggressive; an assertive woman is seen as unbalanced. A white man is viewed as firm, a strong leader,” he noted.

He also pointed out that unconscious bias is the root of all prejudice—and challenges anyone to mentally list five Black CEOs widely regarded as good leaders. “Most people won’t even be able to start that list,” he said.

Mr. Almeida shared his personal experience to illustrate the issue: “I spent 32 years in the pharmaceutical industry, 26 of them in leadership positions, and the last 20 as a director. During those 20 years, I was the only Black director at the company. In all my professional life, I rarely saw another Black person in the same room. Likewise, in 24 years teaching in higher education, I’ve never had a Black colleague in the faculty lounge.”

To address the problem, Marcus Kerekes, founder and CEO of Diversitera, said that diversity should not be treated as a one-off campaign but as an ongoing, structured effort. “From a social standpoint, inclusion in the workforce generates income and brings people into the economy. The Black population is the largest demographic in Brazil, yet for years it has been relegated to niche markets,” he said.

Mr. Kerekes also noted that the closer a company is to the end consumer, the more likely it is to have diverse leadership. “We hypothesize that there is pressure from more discerning and conscious consumers,” he said.

Luciene Malta, senior institutional relations manager at MOVER (Movement for Racial Equity), believes promoting Black professionals to executive roles requires clear commitments, structured career and succession plans, and sustained action. “All goals require investment to be achieved. The same must apply to diversity, equity, and inclusion,” she said.

For Ms. Malta, it’s not just about developing Black professionals—it’s also essential to prepare the workplace to welcome them. “Investing in a cultural shift and educating leadership is fundamental,” she added.

(Under the supervision of Fernanda Gonçalves, assistant editor for the Careers desk)

*By Rafaela Zampolli*, Valor — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Previ exits BRF, rejecting Marfrig offer

Pension of Banco do Brasil workers sheds stake after 30 years as investors, citing better price from market

 

 

 

07/15/2025 

One of BRF’s longest-standing shareholders, the pension fund for Banco do Brasil employees, has opted not to wait for the outcome of the merger with Marfrig. Previ closed its historic position last Friday (July 11), selling off its remaining shares, according to Pipeline and confirmed by the fund.

Previ had been a shareholder since the 1990s, originally through an investment in Perdigão, and remained in the company after its 2009 merger with Sadia. The fund was among the investors dissatisfied with the share swap terms proposed by Marfrig for the merger with BRF, arguing that it secured a better price for its beneficiaries by selling on the open market.

“The shares were sold at a price higher than what would have been offered to minority shareholders through the appraisal rights process if the BRF-Marfrig merger were finalized,” Previ said in a statement, emphasizing its more than 30-year history with the company.

“Previ believes the proposed exchange ratio in the merger does not adequately reflect BRF’s value, potentially leading to losses for minority shareholders and, by extension, for our members. By exiting before the merger’s completion, Previ protects participants’ assets and reaffirms its commitment to technical, well-founded decisions aligned with the best interests of the pension plan,” the statement added.

Previ’s exit rattled investors, with BRF shares dropping 4.55% on B3.

The fund’s departure may weaken the push by minority shareholders seeking better merger terms. Previ, along with asset manager Latache and a member of the Fontana family, had appealed to the Securities and Exchange Commission of Brazil (CVM), successfully delaying the shareholder meeting to vote on the merger twice—the latest postponement, granted last Friday, extended the process by another 21 days.

They are demanding further disclosure of the valuation study underpinning the share price and have also raised concerns about the involvement of Marfrig’s controlling shareholder, Marcos Molina, in the merger vote.

Meanwhile, Marfrig and Mr. Molina continue to buy up BRF shares. The company disclosed that its combined stake, together with Molina’s MAMS fund, has reached 58.87%. When the merger was announced in May, Marfrig held 50.5% of BRF. This increased stake means the merger could be approved even without minority shareholder support.

BTG Pactual has also been purchasing BRF shares in recent days. The bank disclosed it now holds a 7.79% stake in BRF and has derivatives involving call and put options on the stock. BTG did not specify whether the position is proprietary or on behalf of a client.

This article was originally published by Pipeline, the business news platform of Valor Econômico.

*By Maria Luíza Filgueiras — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Economic activity slows following record-breaking harvest

Weak IBC-Br reading triggers GDP downgrades amid concerns over Trump tariffs

07/15/2025

Brazil’s economy showed clearer signs of cooling in May, following the boost from a record-breaking harvest this year. The slowdown comes as economists weigh the mixed impact of announced fiscal stimulus measures against potential fallout from the tariff shock led by U.S. President Donald Trump.

The Central Bank’s Economic Activity Index (IBC-Br), often viewed as a GDP proxy, fell 0.74% in May from April on a seasonally adjusted basis. The result, released on Monday, was below even the most pessimistic forecasts compiled by Valor Data—Valor’s financial data provider—which ranged from a 0.5% contraction to a 0.5% expansion, with a median of -0.1%. The unexpected drop has prompted analysts to revise down their 2025 growth forecasts.

In April, the IBC-Br had posted a marginal increase of 0.05% (revised from 0.16%). Over the 12 months through May, the index rose 4.04%.

“The weakness in activity was broad-based, with monthly declines in agriculture (-4.25%) and non-agricultural sectors (-0.31%). Industry contracted 0.52% while services were flat, up just 0.01%,” wrote Alberto Ramos, chief economist for Latin America at Goldman Sachs, in a note to clients. According to his estimates, the statistical carryover for second-quarter growth dropped from 0.83% in April to 0.16% in May.

Rafaela de Sousa, an economist at BuysideBrazil, pointed out that this was the first monthly decline of the year for both the overall index and its non-agricultural component, reinforcing the narrative of weak activity in the second quarter. She warned that this is an important risk to monitor, given the potential impact of the U.S. tariffs.

BuysideBrazil maintains a 2025 GDP growth forecast of 2.3% but estimates that tariffs could affect up to 30% of Brazil’s exports to the U.S. Under that scenario, the economy could lose as much as 0.6 percentage point of GDP over a 12-month period, with most of the drag occurring in 2026, said Ms. de Sousa.

XP Investimentos also sees downside risk to its current forecast of 2.5% GDP growth. According to the firm, Mr. Trump’s tariffs alone could shave up to 0.3 percentage point from growth this year.

Despite the recent data, economist Rodolfo Margato said the labor market and fiscal stimulus, whose effects have yet to show up in the numbers, should help prevent a sharp downturn in domestic activity. He calculates that May’s IBC-Br result leaves a 0.2% statistical carryover for the second quarter, and expects the index to close the period with a 0.3% gain, close to XP’s GDP projection of 0.4%.

Oxford Economics revised its 2025 growth forecast to 2.2% from 2.5%. Still, economist Felipe Camargo does not foresee a major impact from the tariff dispute.

“Our analysis is that the effect on growth will be limited, even if Brazil retaliates. We expect the two countries to reach an agreement in the coming months, though any deal is likely to involve tariffs higher than those in the pre-Trump era,” said Mr. Camargo.

Similarly, ABC Brasil downgraded its GDP forecast for this year to 2.3% from 2.5%. “What stood out to us in the monthly and quarterly breakdown of the IBC-Br was the weaker performance of cyclical sectors, those more sensitive to interest rates,” said Daniel Xavier, the bank’s chief economist. He noted that the services and industrial sectors, which faltered in the May data, also showed a deterioration in FGV’s business confidence index, suggesting further weakness may be ahead.

In terms of monetary policy, Mr. Xavier added that the IBC-Br reading should be well received by the Central Bank, as it aligns with the institution’s scenario of 2.1% growth this year while also indicating cooling in cyclical sectors. “Nonetheless, the output gap remains inflationary, and for that reason, the Monetary Policy Committee (COPOM) is likely to maintain a restrictive stance and keep interest rates at a tight level for an extended period,” he said.

*By Marcelo Osakabe and Gabriel Shinohara  — São Paulo and Brasília

Source: Valor International

https://valorinternational.globo.com/

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The Current Situation of Social Media in Brazil: Limits and Regulations.

MURRAY ADVOGADOS

 

The Current Situation of Social Media in Brazil: Limits and Regulations.

 

By Alexandre Tuzzolo Paulino.

 

The rise of social media as tools for communication and information in Brazil has profoundly transformed social, political, and institutional relationships. This shift has generated a range of legal challenges, particularly regarding freedom of expression, data protection, and liability for published content.

Currently, Brazil does not have a specific and consolidated law that fully regulates the operation of social media. Existing legislation is fragmented and relies on norms such as the Brazilian Internet Bill of Rights (Law No. 12,965/2014), which establishes principles for internet use, such as neutrality, privacy, and user accountability. Additionally, the General Data Protection Law (LGPD – Law No. 13,709/2018) governs the processing of personal data, directly affecting platforms that collect and use user information. Under discussion in the National Congress is the so-called “Fake News Bill” (Bill No. 2630/2020), which seeks to establish a legal framework to combat disinformation on digital platforms.

The current landscape highlights the urgency of establishing a balanced legal framework that ensures freedom of expression and technological innovation, while also setting clear limits on the circulation of content harmful to public discourse and the democratic rule of law. The challenge is to create effective regulations without leading to censorship or digital authoritarianism.

Despite progress in legislative debate, the regulatory gap has been partially filled by rulings from the Federal Supreme Court (STF), which has ordered the removal of content, the suspension of user accounts, and the imposition of liability on platforms.

In June 2025, the Federal Supreme Court (STF) ruled that digital platforms can be held liable for illegal content published by users, even without a prior court order, in cases involving serious crimes, hate speech, racism, homophobia, Nazi or fascist ideologies, and other forms of discrimination. This decision reinterprets Article 19 of the Marco Civil da Internet, which previously held platforms liable only after a specific judicial order for content removal.

It is undeniable that combating disinformation and digital violence is a pressing imperative of our time. However, preserving democracy requires institutional balance and respect for due legal process, to avoid lapsing into institutionalized censorship, which would ultimately undermine the very legitimacy of the institutions that are meant to be protected.

July 2025

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Brazil could partner with U.S. clients to negotiate tariffs

Former World Bank director Carlos Braga opposes retaliation strategy and warns of weak BRICS connection, yet rules out “economic collapse”

 

 

 

07/14/2025

Carlos Primo Braga, associate professor at Fundação Dom Cabral (FDC) and former director of Economic Policy and Debt at the World Bank, believes Brazil should ally itself with U.S. industries reliant on Brazilian imports to strengthen its negotiating position with Donald Trump’s administration.

Mr. Braga opposes retaliation and sees room for negotiation, despite the political undercurrents behind the tariff decision announced last week. Because the move was driven by non-economic motives, he also dismisses any meaningful connection between Trump’s actions and Brazil’s membership in the BRICS bloc.

“Obviously, economic reasoning doesn’t explain the tariff hike. From an economic standpoint, the BRICS summit didn’t promote a confrontational agenda. That’s why I see a weak connection when people claim Trump’s action reflects the rise of BRICS,” he said.

Mr. Braga argues that sectors like the U.S. steel industry—which imports semi-finished steel from Brazil as a key input—could be natural allies in lobbying against the 50% tariff. He said the U.S. automotive industry may also have a vested interest in resisting the tariffs, given the potential for rising input costs that could undermine competitiveness.

He criticized what he described as a shift in U.S. trade policy. While in the past the country was an architect of global trade governance, today it is “undermining that very system,” he said, referencing the weakening of the World Trade Organization (WTO)—a trend that accelerated under Mr. Trump but was also seen during the Biden and Obama administrations.

“Mr. Trump simply doesn’t believe in multilateral solutions. Since January, WTO rules, such as the most-favored-nation principle, have been under attack, and he doesn’t care. What will replace this system? The jungle and the law of the strongest. That will undoubtedly generate more tension,” he warned.

Depending on how Trump’s tariff policy evolves toward China and the European Union, Mr. Braga sees potential for mounting domestic opposition and lobbying in the U.S. Congress. “This is also a path for Brazil, working with U.S. industries that depend on Brazilian imports,” he suggested.

Brazil is the second-largest exporter of steel to the U.S. While other countries could theoretically take over the market, Mr. Braga noted that supply disruptions and price hikes would be inevitable in the U.S. “That will reduce the competitiveness of American industry, and I guarantee they are not happy about these tariffs,” he said.

Mr. Braga cautioned that retaliation would be the wrong move for Brazil and could cause more harm than good. While he acknowledged the legitimacy of Brazil’s Economic Reciprocity Law, which allows for countermeasures, he believes it’s not the right strategy for now.

“Retaliation definitely won’t help. It will raise U.S. import costs and increase prices for Brazilian consumers—both people and businesses. We need to stay calm and negotiate,” he urged.

Mr. Braga is also skeptical about any action at the WTO, arguing that although Brazil could win a case on legal grounds, the ruling would have no practical effect.

“Brazil could file a case at the WTO and would certainly win since the tariffs violate WTO rules. But the U.S. would appeal, and with the appellate system paralyzed, the case would remain in limbo without resolution,” he explained.

Although not optimistic about the negotiations, Mr. Braga noted there are areas where the U.S. remains interested in fostering positive relations with Brazil, citing the Alcântara space base partnership as one example.

While he expects some economic impact from the 50% tariffs, Mr. Braga dismissed fears of a broader crisis. “Exports to the U.S. represent about 2% of Brazil’s GDP. It’s not a disaster, the world isn’t ending, but there will definitely be consequences, especially for the most affected companies,” he said.

Mr. Braga highlighted that the greater concern for Brazil’s trade balance lies in the fact that exports to the U.S. are more heavily weighted toward manufactured goods. For agricultural products and commodities, Brazil can redirect exports to other markets.

“For manufactured goods, it’s more complicated. So, it will depend heavily on how Brazil manages the next steps in these negotiations,” Mr. Braga concluded.

*By Lucianne Carneiro — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

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