COPOM urges caution while markets price in more rate cuts

Brazil’s Monetary Policy Committee leaves room to speed up easing, while a pause looks less likely unless war triggers broader market stress

 

 

The minutes of the Central Bank of Brazil’s latest Monetary Policy Committee, or COPOM, meeting reinforced the market’s view that the country remains in an easing cycle.

By Tuesday (24), the interpretation had gained ground that, even with the war in the Middle East and uncertainty over oil prices, a pause in rate cuts now appears less likely than a possible acceleration in the pace of monetary easing.

The committee sought to sound cautious, saying that its next steps would be determined “over time” amid an uncertain backdrop made even more complex by the war in the Middle East. Even so, it signaled the continuation of a Selic “calibration” cycle after lowering the base rate last week to 14.75% from 15%.

Among market participants, the minutes largely reinforced the message already delivered in the meeting statement. In the section explaining its decision, the committee said that “recent events” would not prevent the materialization of the guidance it had given in January, when it judged that the start of an interest-rate cutting cycle would be appropriate.

COPOM said it had analyzed “the options for the pace of the start of the base-rate calibration cycle” and concluded that a 25-basis-point cut was the most appropriate move at this stage. “The magnitude and duration of the calibration cycle will be determined over time, as new information is incorporated into its analyses,” it said.

In economists’ view, that passage shows an asymmetry in COPOM’s thinking. It would take a worsening of the war, with additional effects on oil prices and the exchange rate, to interrupt the cutting cycle, while any improvement in the external backdrop could allow the pace of cuts to accelerate to 50 basis points with fewer obstacles.

Felipe Sichel, chief economist at Porto Asset, said the minutes brought little new compared with the statement and made clear that COPOM believes rates remain highly restrictive and are having the expected effect on activity.

“The main discussion was about pace and about confirming that we are, in fact, in a rate-cutting cycle. The bar for interrupting that process is currently very high. Barring a disruption in the exchange rate and oil prices, the next moves remain Selic cuts,” he said.

According to BTG Pactual’s team, led by Tiago Berriel, the minutes reinforced a dovish tone by remaining broadly neutral relative to the Central Bank’s earlier communication.

“The minutes are consistent with the view that COPOM left the door open both to accelerate and to maintain the 25-basis-point pace ahead, depending on how the geopolitical backdrop evolves. The bar for interrupting the cycle seems high to us. So if the current scenario holds, our call remains for the cycle to continue with a 25-basis-point cut at the next meeting. A reduction in uncertainty with positive effects on energy prices would lead to an acceleration to a 50-basis-point move,” they said.

War clouds outlook

For Itaú Unibanco, the minutes suggest the Central Bank remains confident in its ability to calibrate the degree of monetary restriction.

COPOM said the magnitude and duration of the cycle will depend on incoming information.

In recent weeks, the war involving Israel, Iran, and the United States has added uncertainty and pushed oil prices higher. Brent crude has traded above $100 a barrel.

“That decision [to cut rates and wait for new information] is consistent with the current scenario, in which the duration and extent of geopolitical conflicts, as well as mixed signals about the pace of economic slowdown and its effects on price levels, make it harder to identify clear trends,” the committee said.

The market was also trying to understand why COPOM projected inflation at 3.3% over its relevant policy horizon, well below what economists had expected.

According to the committee, the oil price is assumed to follow the futures curve for the next six months and then rise 2% a year thereafter. “Given the observed Brent futures curve, this framework translated into a declining path in the second half of the year, after a sharp increase in the short term,” COPOM said.

“In practice, that meant an upward revision to short-term inflation, but with a partial reversal over the relevant horizon, helping keep the projection relatively lower for the third quarter of 2027,” BTG Pactual said.

For Itaú Unibanco’s economics team, led by former Central Bank director Mario Mesquita, the minutes indicate that the authority remains confident in its ability to calibrate the level of monetary restriction despite the global turbulence. “In fact, the minutes suggest that only the options of a 25-basis-point cut or a 50-basis-point cut were on the table,” the bank’s economists wrote.

According to Itaú, COPOM also highlighted that the disinflation process has lost momentum in more recent readings, something that was not in the statement, and that a possible reacceleration in activity in the first quarter “will not imply a major change in its current scenario.” In that sense, the bank said, the minutes are consistent with an acceleration in the pace of Selic cuts in April, to 50 basis points, which would take the rate to 14.25%.

Split signals

J.P. Morgan economists led by Cassiana Fernandez share the view that the next meeting could bring a larger cut. For the bank, the minutes signaled further easing, even as they stressed the uncertainty created by the war and played down the recent improvement in activity data. “It will be important to watch how the Central Bank handles these mixed signals in its estimate of the output gap,” they said.

For J.P. Morgan, the minutes brought little new on inflation. “The Central Bank referred to the inflation process using past-tense verbs, which probably reflects the expected impact of the conflict, already incorporated into the projections, on the IPCA inflation index. The Central Bank highlighted that inflation expectations had been falling before the conflict, but have risen again since then,” the U.S. bank’s economists said in a report.

*By Gabriel Roca, Victor Rezende and Gabriel Shinohara — São Paulo and Brasília

Source: Valor International

https://valorinternational.globo.com/

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China eyes Brazil rail and ports, warns on taxes

Brazilian government says expanding transport infrastructure is a priority and that it is working to improve legal certainty and unlock private investment

 

 

 

China Summit: Panel discusses opportunities in logistics and infrastructure
China Summit: Panel discusses opportunities in logistics and infrastructure — Photo: Heka Produciones/Valor

China sees major investment opportunities in Brazil’s rail and port infrastructure, but the complexity of the country’s tax system is still viewed as a significant obstacle. Expanding the sector is one of the Brazilian government’s priorities, and officials say they are working to increase legal certainty and unlock private investment.

The issue was discussed during the panel “Logistics and Infrastructure: Connections Linking Ports, Railways and Chinese Investment in Brazil” at the Summit Valor Econômico Brazil-China 2026 on Wednesday (25) in Shanghai. The event is organized by Valor Econômico in association with the Brazilian Center for International Relations (Cebri) and the Chinese People’s Association for Friendship with Foreign Countries (CPAFFC). The panel was moderated by Valor Executive Editor Zínia Baeta.

“The biggest barrier in Brazil is the legal and tax environment, which is highly fragmented,” said Li Sisheng, executive vice president of Power China International. In his view, that helps explain why some foreign companies have struggled with investments in the country. He noted, however, that the company has $4 billion invested in Brazil and is studying projects in highways, railways, and energy.

Leonardo Ribeiro, rail transport secretary at Brazil’s Transport Ministry, said the government wants to raise railways’ share of the country’s transport matrix from 20% to 35%. According to Ribeiro, Brazil’s Railway Legal Framework now provides laws, regulations, and standardized contracts that ensure legal certainty for investment in the sector. “We also have strategies to provide guarantees so these projects can move forward under a risk-sharing structure in which the government will share with the private sector any extreme situations.”

Ding Songbing, general manager and head of strategy and research at Shanghai International Port, said there is ample room for the development and modernization of Brazilian ports.

“Ships are getting larger, and ports need to adapt,” he said. In his view, climate adaptation as well as automation and digitalization of processes are two other areas with strong potential.

Zhang Jianyu, deputy secretary-general and chief development director of the Belt and Road International Green Development Alliance, said China and Chinese stock exchanges have been tightening environmental requirements for companies, and those rules also apply to their operations abroad. “If a Chinese company does not have good sustainability results in the Brazilian market, for example, it will face difficulties raising capital here in China.”

The “Summit Valor Econômico Brazil-China 2026” is the third event of its kind organized by the newspaper in China since 2024. This edition is sponsored by BYD, the Rio city government through Invest.Rio, Embratur, the Rio de Janeiro state government, and ApexBrasil, with support from the São Paulo city government and São Paulo Negócios, Suzano, CBMM, Alibaba, the World Resources Institute, the Climate and Society Institute (iCS), CNA Senar, and the National Confederation of Industry (CNI).

The newspaper does not cover expenses when public officials invited to take part in the discussions attend the event.

  • By Asdrúbal Figueiró  — São Paulo
  • Source: Valor International
  • https://valorinternational.globo.com/
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Yardeni sees global stocks falling as much as 15% if war drags on

Yardeni Research chief says prolonged conflict could trigger deeper selloff, though he still finds opportunities in Brazil and other emerging markets

 

 

Despite risk aversion in global markets caused by the war in the Middle East, New York stocks have shown resilience and are still trading close to their record highs.

Still, economist Ed Yardeni, president of Yardeni Research, believes the conflict is unlikely to end anytime soon and sees the possibility of a further correction of as much as 15% in global stock markets, especially in economies more dependent on oil from the Persian Gulf region.

“My concern is that the conflict lasts longer than the market expects,” he said in an interview with Valor. “It may be difficult to achieve a quick resolution to the conflict. Iran has lost significant ground in recent weeks, but may not fully recognize that, and conflicts involving non-state or asymmetric actors rarely end quickly, tending to drag on for extended periods,” said the economist, who previously worked at Deutsche Bank and Prudential Financial.

In his view, even if Israel and the United States have succeeded in eliminating leaders, “that does not mean the philosophy of the Iranian regime will disappear.” Yardeni sees a 10% to 15% correction in the global stock market as likely, especially in countries more dependent on Middle Eastern oil, such as South Korea, Japan, and China.

Against the broader market view, Yardeni believes the dollar should continue to strengthen. After a sharp depreciation last year, the consensus among investors for this year had been that the currency would remain on a downward path. But the dollar has risen firmly since the start of the war with Iran. “This conflict is also reminding investors that, in times of uncertainty, the main safe haven is still the United States and the dollar.”

Despite U.S. dominance, Yardeni also sees good opportunities in emerging markets such as Brazil. Late last year, he changed his recommendation on emerging markets to overweight, the equivalent of a buy rating. With the start of the war, the environment changed.

Still, once the conflict ends, he believes emerging markets have the potential to perform well. “There is no urgency to get in immediately, however, since valuations may become even more attractive if the war persists.”

Market relief

On Monday (23), U.S. President Donald Trump announced a five-day delay in attacks on Iranian plants and energy infrastructure, citing “productive talks” with officials from the Islamic Republic, which triggered a positive market reaction, though Tehran denied it.

Yardeni believes the possibility of negotiations is a good sign, but said the economic outlook remains uncertain. “Negotiating does not always get you where you want to go. It is still not clear where this is heading.”

New York stocks have proved resilient to the deterioration in investor sentiment. At its low for the year so far, the S&P 500 was down 4.96% from its all-time high, reached on January 27, when the index closed at 6,978.60 points.

Even so, Yardeni said it is “realistic” to expect a deeper correction. “We also need to consider the risks of a global recession and a global bear market, which have increased significantly over the past week,” he said.

So far, market participants’ concern has centered on inflationary pressures from higher oil prices. Yardeni,, however, also pointed to the possibility that this scenario could weigh on U.S. economic growth, something that, in his view, will leave the Federal Reserve in a difficult position.

“The Fed probably will not be able to cut rates, because that could intensify the inflationary effects of the oil shock,” he said. “We have a classic problem: higher inflation and weaker growth at the same time, putting the Fed in an extremely difficult position. At some point, the Fed will have to recognize that there are limits to what monetary policy can do, and that the outcome will depend more on how the conflict evolves.”

Yardeni stressed that there is still no clear prospect of negotiations or a ceasefire and believes Trump’s stance has often been contradictory, helping to deepen the sense of uncertainty. “He has been consistent in calling for unconditional surrender, something the Iranian regime is unlikely to accept,” he said.

In line with the consensus view among market participants, Yardeni expects the Fed to leave rates unchanged for at least the next seven months, avoiding classifying the inflationary shock as “transitory” in light of the uncertainty. “Rates are still high enough to slow the economy, especially with oil prices rising. I also think productivity is coming back, which could be an important disinflationary force in the coming years,” he said.

Yardeni also rules out the possibility of monetary tightening unless the war lasts longer than expected and oil prices remain at very high levels.

“Warsh will probably be frustrated. If he is confirmed by the Senate, he will take office in an environment of higher inflation,” Yardeni said, referring to Kevin Warsh, Trump’s pick to lead the Fed. “In that context, it will be difficult to persuade other members to cut rates. Most will probably prefer not to act, recognizing the limits of monetary policy. Warsh will probably have to moderate his stance even further.”

Yardeni believes that if higher energy prices, and therefore higher inflation, end up weighing on consumers, market participants may revise corporate earnings forecasts downward, hurting stock-market performance. “We have had oil shocks in the past that led to stagflation, bear markets, and even a lost decade for the U.S. market. We should not be naive in thinking that cannot happen again,” he said.

Even so, for now he is maintaining his year-end target of 7,700 points for the S&P 500. “We have had similar crises in the past that turned into buying opportunities,” he said. “At the same time, it is conceivable that we could see a sell-off. It will be a very volatile market until the war is completely over, and we may be surprised.”

*By Luana Reis — São Paulo

Sosurce: Valor International

https://valorinternational.globo.com/

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The present and future of the Brazil-China relationship

Valor brings together officials and business leaders in Shanghai to discuss business prospects

 

 

Summit Valor Econômico Brazil-China 2026 in Shanghai: present and future of economic relations between Brazil and China will be in the spotlight — Foto: Pixabay
Summit Valor Econômico Brazil-China 2026 in Shanghai: present and future of economic relations between Brazil and China will be in the spotlight — Photo: Pixabay
 

The present and future of economic relations between Brazil and China will be in the spotlight from Wednesday (25) to Friday (27) in Shanghai and its metropolitan area. Officials, diplomats, business leaders, investors, academics and analysts from both countries will participate, on the first day of the event, in the “Summit Valor Econômico Brazil-China 2026,” promoted by Valor in association with the Brazilian Center for International Relations (Cebri) and the Chinese People’s Association for Friendship with Foreign Countries (CPAFFC), to discuss opportunities in bilateral relations. Visits to Chinese companies’ operations will complete the program on the other two days, allowing an exchange of information and experiences on innovation.

Brazil’s largest trading partner for almost two decades, China’s business with Brazil has increased even further in recent years. Numbers from the Secretariat for Foreign Trade (Secex/Mdic) indicate that last year Brazilian shipments to China reached $99.9 billion, up 5.9% compared with 2024. Imports also had a stronger expansion (11.4%), totaling $70.9 billion. And for 2026, economists project a continuation of this trend. A study by the Brazil-China Business Council (CEBC) indicates that the volume of Chinese investments in Brazil in 2024 totaled $77.5 billion, placing the Asian nation as the fifth largest foreign investor in the country.

Participants in the summit’s opening include Marcos Galvão, Brazilian ambassador to China; Marcos Caramuru, international advisor to Cebri and former Brazilian ambassador to China; Shen Xin, vice-president of CPAFFC; Chen Jing, vice-president of the Standing Committee of the Shanghai Municipal People’s Congress; Frederic Kachar, general director of Editora Globo and Sistema Globo de Rádio (SGR); and Maria Fernanda Delmas, editor-in-chief of Valor.

Next, eight panels will address the main economic connections between the two countries: “Brazil and China on the Global Chessboard: Strategies for a World with New Trade Relations,” “Brazil and China in the Global Leadership of the Energy Transition and Critical Minerals,” “Logistics and Infrastructure: Lines Connecting Ports, Rails and Chinese Investment in Brazil,” “Forging the Future: Health, AI and Emerging Sectors in Brazil-China Collaboration,” “Agribusiness – Food Security and the Next Growth Cycle of Brazilian Agriculture with China,” “Mobility of the Future: Chinese Industrial Plans in Brazil,” “Green Corridors: Developing the Low-Carbon Fuel Market in the Brazil-China Aviation and Maritime Transport” and “Paths to a Robust Finance Ecosystem.”

In the first panel, the debaters will be Izabella Teixeira, international advisory board member of Cebri and former minister of the environment; ambassador Marcos Galvão; Fang Li, chief representative of the Beijing Office of the World Resources Institute (WRI); Xu Tianqi, deputy director of the Department of Regional Studies at the Renmin University of China’s Chongyang Institute of Financial Studies; and Briza Bueno, general manager in Brazil of AliExpress.

The discussion on the role of critical minerals in the energy transition will feature Ricardo Lima, CEO of Companhia Brasileira de Metalurgia e Mineração (CBMM); Jorge Arbache, professor of economics at the University of Brasília; Gu Haidong, vice-mayor of Suzhou; Han Zhao, senior investment executive at the Asian Infrastructure Investment Bank (AIIB); Marcelo Sampaio, executive director of legal and institutional affairs at Vale Minerals China; and Shelley Wang, head of the Brazil unit of Hexing Electrical.

Logistics and infrastructure issues will be discussed by panelists Leonardo Ribeiro, secretary of rail transport at Brazil’s Ministry of Transportation; Gao Liang, vice-president of the China Overseas Engineering Group; Li Sisheng, executive vice-president of Powerchina International; Ding Songbing, general manager and head of the Strategy and Research Department at Shanghai International Port; and Zhang Jianyu, deputy secretary-general and chief director of Development at the Belt and Road Alliance for Green Development.

The panel on health and artificial intelligence will include Igor Marchesini Ferreira, special advisor to the Ministry of Finance; Shirley Lu Han, specialist at the China Chamber of Commerce for Import and Export of Medicines and Health Products (CCCMHPIE); Felipe Daud, director of institutional relations for the Alibaba Group in Latin America; Leticia Frazão Leme, minister counselor at the Brazilian Embassy in Beijing; Chen Weijing, deputy director at the Hangzhou Municipal Commerce Agency; Zhou Yong, CMO of Hangzhou StarSpecies Robotics; and Hui Jingbo, marketing director at Hangzhou Zhizhen Technology.

The panel focused on agribusiness will bring together Pablo Machado, executive vice-president of business in China and strategy at Suzano; Kevin Chen, international dean at the Chinese Academy of Rural Development (CARD); Larry Lin, chief representative at Minerva’s office in China; André Guimarães, executive director at Ipam; Inty Mendoza, chief representative for China at CNA/Senar; and Tian Lei, president of the Tianjin Meat Producers Association.

The discussion on mobility and the automotive industry will include Sidney Levy, president of Invest.Rio; Victor Oliveira de Queiroz, general manager at the ApexBrasil office in Beijing; Priscila Sakalen, secretary of transportation and urban mobility of the State of Rio de Janeiro; Cui Hongbin (August), director of international energy systems’ projects for Latin America at CATL.

The panel on green fuels will feature Sergio Peres, professor at the University of Pernambuco (UPE); Larissa Wachholz, senior fellow at Cebri; Feng An, executive director at the Energy and Transportation Innovation Center (iCET); Shen Wang, CEO of SafPac; Li Zhenglong, vice-director at Zhejiang University; and Xia Shubiao, manager of the R&D center for security technology at China Marine Bunker.

The summit’s closing will bring together, to discuss financing mechanisms, Ricardo Damiani, representative of Banco do Brasil in China; ambassador Marcos Caramuru; Lucas Reis, senior leader of climate finance at BNDES; Li Zhiqing, executive director of the Institute of Green Finance at Fudan University; Wu Changhua, representative of the Global Climate Academy; Liao Shuping, senior researcher at the Bank of China Research Institute; and Ruiming Song, special climate advisor at Century City Holdings.

The panels will be moderated by Fernanda Delmas; Zínia Baeta, executive editor of Valor; Lucas de Vitta, assistant editor at Valor; Maria Luiza Filgueiras, editor of Pipeline; Marli Olmos, special reporter for Valor; and Marcelo Ninio, correspondent for O Globo in Beijing.

In addition to the debates, which will take place at the Mandarin Oriental hotel, the program includes two days of visits to companies that have become prominent worldwide for the technological innovations introduced in their sectors of activity. At Alibaba, artificial intelligence and cloud environment solutions will be the focus; at JD (Jingdong Group, China’s largest retailer), logistics; at Fourier, robotics; at Envision, energy transition.

The “Summit Valor Econômico Brazil-China 2026” is the third event of its kind promoted by Valor in China since 2024. This edition is sponsored by BYD, the City of Rio de Janeiro through Invest.Rio, Embratur, the Government of the State of Rio de Janeiro, and ApexBrasil, with support from the City of São Paulo and São Paulo Negócios, Suzano, CBMM, Alibaba, the World Resources Institute, the Climate and Society Institute (iCS), CNA Senar, and the National Confederation of Industry (CNI). The panels will be broadcast on Valor’s website and social media. There will be English-language coverage on Valor International. The newspaper will not cover any expenses for public officials participating in the debates.

*By Valor — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Brazil weighs R$15bn package for sectors hit by tariffs and war

Credit line is part of broader effort to cushion impact on fuel prices and exposed industries

The government is preparing a provisional presidential decree to launch “Brazil Sovereign Plan 2,” and under the scenario now being considered, it is studying a R$15 billion credit line to support sectors affected by new U.S. tariffs and the war involving Iran.

Of that total, about R$10 billion could come from the Annual Budget Law, with another R$5 billion from the Export Guarantee Fund, using resources left over from the first phase of the program. The issue is still under discussion by government teams.

The debate is taking place amid a broader discussion within the government over a package of measures to mitigate the effects of the conflict, especially on fuel prices and the sectors most exposed. One alternative under review is to increase subsidies for diesel producers and importers through a new provisional presidential decree, or MP.

MP No. 1,340/2026 set a subsidy of R$0.32 per liter, with an estimated fiscal impact of R$10 billion for the federal government through extraordinary credit, an expense that falls outside the spending cap but is counted toward the primary balance target. If that option moves forward, the cost could rise through an increase in the subsidy amount via a new MP adjusting the current parameters.

Government officials believe there is enough revenue to fund this package of measures, especially given the increase in tax collection linked to higher Brent crude prices, without the need to declare a public calamity.

Teams have been monitoring developments on a daily basis in a scenario marked by high volatility abroad, amid the conflict in the Middle East, and its effects on the domestic market, in order to calibrate possible measures. Brazil Sovereign Plan 2 may be announced before the broader package or at the same time. The final decision will rest with President Luiz Inácio Lula da Silva.

The government is also betting on reaching an agreement with state governors. As Valor reported last week, the states have reservations about the federal government’s proposal to cut to zero the state value-added tax on goods and services, or ICMS, on imported diesel and have begun discussing an alternative based on direct subsidies for importers. The issue was discussed on Friday (20) in a meeting between state finance secretaries and National Treasury Secretary Rogério Ceron.

Under that model, each state would grant the subsidy to the importer, with a partial reimbursement later made by the federal government, in a cost-sharing arrangement with half borne by the states and half by the federal government. The states agreed to draft a structured proposal along those lines, while the economic team agreed to formalize a compensation model.

The subsidy amount is still being studied by the states, but talks have included an estimated cost of R$2 billion a month for each side — states and federal government.

Subnational governments also raised the possibility of increasing federal compensation to 70% of the losses, but the Finance Ministry resisted the change, stressing the collaborative nature of the proposal.

* By Giordanna Neves  and Lu Aiko Otta, Valor — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Workweek reform can have mixed results for companies

Debaters believe the effects would be more negative for labor-intensive sectors and for smaller businesses

 

 

 

The prospect of ending the six-day workweek as discussed in Congress could have different impacts on Brazilian companies. The effects could be more negative for labor-intensive sectors, such as commerce and services in general, but also for smaller businesses, which have less capacity to adjust to a reduction in the maximum working hours, said experts who participated in another debate in the Caminhos do Brasil seminar series, in Rio de Janeiro, on Thursday (19). There is also uncertainty about the ability of companies to absorb cost increases, and how much this will affect employment, inflation, and economic activity.

According to the president of the Employment and Labor Relations Council of the Federation of Commerce of São Paulo (FecomercioSP), José Pastore, commerce would be one of the sectors most affected by the reduction in working hours for two reasons. On the one hand, it is labor-intensive. On the other hand, many establishments operate seven days a week, or even 24 hours a day, such as pharmacies and supermarkets. “The increase in working hours hits the retail sector hard. That’s why we can’t just look at the average. The Brazilian reality is very diverse, and the impacts are very different,” said Pastore.

For him, the new, shorter working hours schedule would require adaptation on the part of companies, which would have four possible adjustments to make. The first would be to pass on the increased payroll cost to the prices of goods and services sold, which may be inevitable, given that many companies operate with narrow profit margins. The second mechanism would be to lay off employees with higher salaries and fill the vacancies with lower-paid workers, as a way to mitigate the increase in labor costs—which would increase turnover, a problem that typically causes training problems.

The third type of adjustment would be to invest in automation, replacing some employees with machinery. The result for the economy as a whole would be a reduction in job openings. Finally, given the increase in personnel costs, a fourth option would be to review the investment plan, which could lead to a contraction of businesses, slowing down economic activity and, in the worst case, leading to a recession. “There are four possible mechanisms. And the company might implement all four together. All of them are bad for the worker, especially the most vulnerable,” said Pastore.

Paulo Solmucci, president of the Brazilian Association of Bars and Restaurants (Abrasel), cited an estimated 20% increase in labor costs for companies in the sector, due to the introduction of two days off per week and the reduction in the weekly work schedule to 40 hours. This cost increase could not be offset by greater use of technology. The higher costs would then be passed on to the final prices for customers.

“The consumer wants the restaurant open for six days, just as they want the health center, the urban cleaning service. This means increasing the payroll by 20% to maintain service to the consumer, which results in 7% to 8% increases in price,” said Solmucci. “The consumer should ask: Does it fit their budget? Are you aware that you will pay more to have the same thing?”

A study by the National Confederation of Trade in Goods, Services and Tourism (CNC), released in February, estimates that reducing the work week to 40 hours could generate an extra cost of more than R$350 billion per year for commerce and service companies. According to the calculations, passing on part of this impact to consumers would lead to an average price increase of 13%. According to another study, published by the Institute for Applied Economic Research (IPEA), reducing the work week to 40 hours would increase labor costs by an average of 7.84% for companies. For IPEA researchers, an increase of this size is absorbable, as it is similar to that recorded in years of strong minimum wage adjustments, such as 2001, 2006, 2012, and 2024.

In the view of Congressman Reginaldo Lopes (Workers’ Party), author of one of the proposed amendments to the Constitution on the subject that are being discussed in the Chamber of Deputies, the impacts may be different depending on the sector, but if there is a four-year transition to the proposed reduction in weekly working schedule, the impact can be absorbed: “[It] is possible for medium and large companies. I recognize that, for a very small company, with two or three employees, the new 5×2 schedule may have a greater impact.”

For the economist and professor Naercio Menezes Filho, holder of the Ruth Cardoso Chair at Insper, it is necessary to consider particularities: “There will be specific situations in which it will be difficult for small companies to bear [the increase in costs], if there is no increase in productivity. Therefore, everything has to be done calmly.”

*By Carolina Nalin, O Globo — Doha

Source: Valor International

https://valorinternational.globo.com/

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Hotel chains expand into Brazil’s agribusiness cities

Growth in farming regions is driving hotel development across Brazil, with international operators targeting secondary markets, new demand hubs

 

 

 

The strength of Brazil’s agribusiness sector, which has fueled broad economic growth in countryside cities, has supported the hotel industry’s expansion in recent years. Cities in the Central-West, South, and Southeast that once had limited hospitality infrastructure have become increasingly construction hubs for new developments.

Beyond local entrepreneurs’ role in project financing, the sector has benefited from development banks, which have been key in a high-interest-rate environment.

The surge in hotel demand in agribusiness regions has surprised French hotel group Accor.

“We operate with a highly structured approach, mapping around 100 key cities along Brazil’s so-called agribusiness corridor. We are already present in more than 30 cities like those and continue to expand,” Thomas Dubaere, CEO of Accor Americas for the premium, midscale, and economy division, told Valor.

One standout region is Matopiba, which spans the Brazilian cerrado biome across the states of Maranhão, Tocantins, Piauí, and Bahia. “This is a region experiencing strong agricultural expansion and attracting investment,” Dubaere said.

In Brazil, Accor opened ten new hotels last year, including two in agribusiness regions: ibis Styles Bonito (Mato Grosso do Sul) and ibis Primavera do Leste (Mato Grosso). It also signed agreements for five additional hotels in locations such as Chapadão do Sul and Bonito.

The group currently operates 30 hotels in agribusiness cities, totaling 4,135 rooms across states including Maranhão, Tocantins, Piauí, Bahia, Mato Grosso, Mato Grosso do Sul, and Goiás. A decade ago, it had 18 hotels and 2,388 rooms in these markets.

Accor draws on experience from mature markets such as Europe, where it has long operated in smaller cities, many linked to agriculture and industry.

“One key lesson is the importance of combining reach with brand consistency. Outside major urban centers, travelers value predictability even more—knowing exactly what to expect regardless of the location,” Dubaere said, noting that demand in these regions is primarily corporate.

The growth of agribusiness hubs has also led Marriott to introduce its City Express brand in Brazil, aimed at secondary and tertiary cities.

“It is one of our most important brands and the one we plan to scale most aggressively in terms of volume,” said Paulo Mancio, Marriott’s vice president of development in Brazil.

The company is currently evaluating projects in cities such as Bebedouro in São Paulo state and Sinop in Mato Grosso.

“City Express was designed with the Brazilian market in mind,” said Renato Carvalho, senior development manager at Marriott International in Brazil.

In the country, the brand will offer rooms ranging from 15 square meters to 20 square meters in properties with up to 140 rooms.

Marriott has signed seven new City Express contracts in Brazil—three with Fábrica de Hotéis and four with Justa & Utg Empreendimentos—adding about 945 rooms to its pipeline.

The three contracts with Fábrica de Hotéis are in the Northeast and add to the seven announced in March 2025 as part of a long-term agreement to develop 30 properties in the region over 15 years.

The deal with Justa & Utg will expand the brand’s footprint in the Southeast, including projects in Holambra (120 rooms), Araras (120 rooms), and Piracicaba (140 rooms)—all in São Paulo—, as well as Passos (140 rooms), in Minas Gerais.

In agribusiness regions, City Express’s strategy has focused on building new properties. Executives noted that conversions are possible but less likely due to the limited existing hotel supply.

Carvalho added that agribusiness has helped drive broader economic diversification in some cities. “Ribeirão Preto was once heavily tied to agribusiness and today has a significant services sector,” he said.

Growth in agribusiness regions is also evident at Atlantica Hospitality International, which has a strong presence in the Central-West, South, and Southeast. The company now operates 48 properties in these regions, totaling 6,631 rooms. In 2016, it had 27 hotels and 3,680 rooms—an increase of about 80% in room supply over a decade.

“These figures are central to Atlantica’s reach strategy, representing 25% of our total portfolio and 27% of our room supply,” said CEO Eduardo Giestas.

Part of the company’s strategy in these markets is to diversify hotel categories. Of its pipeline, 29% is in the luxury and upscale segment, 52% in the midscale segment, and 19% in the economy segment.

“In terms of financial performance, we recorded 17% growth in ADR [average daily rate] and 18% in RevPAR [revenue per available room] year over year in agribusiness regions,” Giestas said.

In less than a decade, Atlantica tripled its presence in the Central-West, a key grain-producing region, especially soybeans, corn, and cotton. In 2016, it operated four hotels in Mato Grosso and Goiás, totaling 613 rooms. Today, it has 15 hotels and 2,144 rooms.

“Including the Federal District, a key connectivity hub, the portfolio expands to 20 properties and 2,834 rooms—an increase of 275% in hotel count and 250% in room supply,” Giestas said.

The group currently has a pipeline of 16 signed hotels in agribusiness regions, scheduled to open between 2027 and 2031, totaling 2,602 rooms and about R$1 billion in investment. These projects account for 29% of our total hotel pipeline and 31% of our room pipeline.

“Currently, 31% of hotels under negotiation are located in these regions, reinforcing our confidence in the sector’s continued growth,” said the CEO.

At Atrio Hotel Management, the country’s third-largest hotel operator, agribusiness regions currently account for about 5% of revenue. The goal is to raise that share to 20% by 2030, CEO Beto Caputo said.

Atrio currently operates 82 hotels and has 15 signed for the next two years, including three in agribusiness regions.

Caputo noted that financial backing from traditional agribusiness families has helped move projects forward. Due to the limited existing hotel supply, conversions are rare, making new construction necessary.

“What we are seeing is that, with capital accumulation in these regions, there is a growing appetite among investors from different families for hotel projects,” he said. These resources, he added, are complemented by support from regional development banks, which help make projects viable at competitive rates despite high interest levels.

By Cristian Favaro — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Special pensions expand in Brazil, bucking global trend

Benefit covering rural workers and teachers makes up 40% of scheduled retirements, in a pattern with no parallel in the OECD

 

 

 

National Institute of Social Security (INSS) app — Foto: Divulgação
National Institute of Social Security (INSS) app — Photo: Divulgação

Special pensions granted to rural workers, teachers, and people exposed to harmful agents accounted for nearly 40% of so-called scheduled retirements—those based on age and years of contributions—granted by Brazil’s General Social Security Regime (RGPS) in 2024.

That level is far above what is seen in the 38 member countries of the Organization for Economic Cooperation and Development (OECD). In Greece, the country with the highest share, special pensions account for 11% of the total. Of the 38 countries analyzed, 27 grant special pensions, while 11 do not offer early retirement.

The figures come from the study Aposentadorias Especiais: Tendências Internacionais e o Caso Brasileiro (Special Pensions: International Trends and the Brazilian Case), by Rogério Nagamine Constanzi, a researcher at the Institute for Applied Economic Research (Ipea). The survey shows that internationally, the trend has been to restrict or eliminate special pensions, amid doubts about their effectiveness.

In Brazil, these rules have contributed not only to earlier retirements but also to a rise in benefits granted through the courts.

“The standard argument for allowing early retirement based solely on the inability to continue a career in a specific job has lost strength over time. Many OECD countries have eliminated or restricted access to special or early retirement for dangerous or strenuous jobs.

“Labor-market policies should seek to prepare workers for career changes at some point, so they can remain employed until the minimum retirement age. In the Brazilian case, there is a need for more efficient active labor-market policies,” the study says.

Economists interviewed by Valor support adjustments to special regimes in a new pension reform to slow the pace of spending on retirement and survivor benefits.

In Brazil, special pensions under the RGPS include those for rural workers, teachers, workers exposed to harmful agents, and insured persons with disabilities. In the public-sector pension system, known as the RPPS, they include those granted to teachers, workers exposed to harmful agents, insured persons with disabilities, military personnel, and police officers.

Rural pensions

Nagamine’s study shows that, if rural pensions alone are considered, special pensions accounted for 35.6% of total scheduled RGPS retirements in December 2024. If pensions granted for exposure to harmful agents and those for teachers are also included, the share rises to 38.7%. That percentage would be even higher if pensions for people with disabilities were included.

“Out of a total of 20.2 million scheduled pensions under the RGPS, about 7.2 million were rural pensions, almost all based on age. In fact, considering only age-based pensions, rural pensions accounted for 54.4% of the total in December 2024. If all pensions are considered, including disability pensions, the rural share falls to one-third (32.4% of the total),” the study says.

The survey also shows that in the state-level RPPS, the estimate for 2022 was that elementary-education teachers accounted for about four out of every 10 retirees, or 42%. “All of these figures reinforce the diagnosis that special or early pensions in Brazil have a high level of coverage compared with the international landscape,” Nagamine writes in the study.

The weight of special pensions for basic-education teachers in state and municipal public-sector pension systems stands out because the benefit is uncommon in OECD countries, where it was found in only six: Belgium, Colombia, Costa Rica, Estonia, Italy, and Poland.

This high degree of differentiated treatment in retirement has fueled debate, especially internationally, over whether the measure is really effective or whether it would be more appropriate to establish better working conditions through health and safety regulations, limiting exposure to risk factors and encouraging social partners to adopt measures in that direction.

Of the OECD’s 38 member countries, for example, in 15—or 39.5% of the total—there is no special pension, or it is limited to police officers, firefighters, or military personnel. “In Brazil, there is a history of broad coverage for special pensions without there necessarily being a basis in solid evidence,” the study says.

Pressure for reform

The survey also says it is necessary to take into account that the risks involved in certain occupations or sectors are not fixed over time—new risks or new occupations may emerge—and that the labor force shifts, for example, from agriculture and industry to the services sector. “There is a possibility that, due to technological progress, hardship will continue to decline, because strenuous or arduous work tends to be progressively replaced by technology,” the study says.

Nagamine also notes that the debate over whether the characteristics of a certain type of work justify early or special retirement compared with the general rule is complex and sometimes involves political power or corporate interests that can lead to unfair treatment. In OECD countries, for example, there has been a movement to restrict this type of benefit.

“In theory, early retirement would be a way to compensate workers in occupations or activities that, in the medium and long term, tend to reduce life expectancy. For that reason, the criteria should not be limited to wear and tear at work, but should encompass the potential negative effects of working conditions on health,” the study says, adding that the complexity of the issue is worsened by the growing focus on psychological problems caused by stress at work.

The study also says that in Brazil the average duration of these benefits has increased as a result of longer life expectancy among recipients of special pensions. The average duration of this type of benefit rose from about 14.1 years in 2000 to 29.2 years in 2021.

For Luís Eduardo Afonso, a professor at the School of Economics and Administration at the University of São Paulo, “exceptions are, as a rule, bad.” “They are a form of differentiated treatment for a group that managed to make its pressure power count,” the expert said. In the pension reform enacted in November 2019, military personnel were left out, and some categories kept more favorable retirement conditions than the general rule.

Otávio Sidone, a federal civil servant, Social Security specialist, and doctoral student at the University of Brasília, said special regimes need to be continually assessed so that any subsidies to the public debate can be made clear.

Arnaldo Lima, the economist in charge of institutional relations at Polo Capital, added that special pension regimes, besides carrying a high cost for public finances, encourage early retirement. “They should only be preserved when there is objective proof of risk or hardship, with extra financial compensation in the labor market, and not in Social Security.”

He also said the growing number of benefit claims going through the courts, especially in rural areas, is a concern. “In rural areas alone, 30% of benefits depend on court rulings. The solution involves binding administrative precedents, standardized criteria, and greater digitization. Litigation often stems from a lack of legal clarity,” he said.

*By Edna Simão — Brasília

Source: Valor International

https://valorinternational.globo.com/

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A scandal that turns against the system itself

Allies at the center of the Banco Master probe align their legal strategies, signaling a joint offensive against political, judicial, and regulatory institutions

 

 

 

José Luis de Oliveira Lima had already been representing Daniel Vorcaro in other criminal cases. On Friday, he took on another—the Master case. It was Vorcaro who recommended the lawyer to João Carlos Mansur in 2025, when the owner of Reag became a target of Operation Hidden Carbon, an investigation into money laundering in the fuel market.

In Compliance Zero—the operation where the Banco Master’s owner made his debut behind bars—Mansur was also subjected to search and seizure. Investigators suspect that Master attributes its assets to shares in Reag-managed funds that, under what critics describe as weak oversight by Brazil’s securities regulator (CVM), conceal assets and values.

This Master-Reag, Vorcaro-Mansur connection—now unified under a single legal strategy—is far from a minor development in the ongoing investigation. Pierpaolo Bottini, Vorcaro’s former lawyer, has entered plea agreements but is best known for representing individuals targeted by major anti-corruption probes since the Car Wash investigation era.

The arrival of José Luis de Oliveira Lima—known as Juca—indicates that Vorcaro and Mansur will act together. If there are plea deals, they probably won’t target each other specifically, but rather the broader system—politicians, judges, regulators, and financial players.

It remains unclear where businessman Nelson Tanure will position himself. He is represented by another lawyer, Pablo Testoni, and was also the target of a search and seizure in Compliance Zero. Federal police suspect he is the hidden controlling shareholder of Master, and federal prosecutors have charged him with financing R$700 million in capital injections into the bank.

Even if Tanure’s role remains unclear, it is becoming more likely that the operators at the center of the scheme will collaborate against a fragmented institutional landscape. At the Supreme Court, where there are signs that at least two justices acted defensively in Vorcaro’s favor, the latest step has been to bring in the team captain.

Justice Gilmar Mendes’s delay in ruling on Vorcaro’s arrest, at a moment when the outcome already seems decided, is widely seen as a deliberate signal. A clearer message, however, came when he moved to suspend a virtual session and bring to the full bench a case involving a preliminary injunction by Justice Flávio Dino. The injunction had stopped a congressional inquiry’s attempt to access the tax and banking records of Fábio Luís Lula da Silva, the president’s son.

By bringing the case to the physical plenary, Mendes seems to be testing whether his colleagues are willing to involve President Lula in a broader institutional confrontation. A view gaining support within the court suggests that if Lula did not obstruct the Master investigation because he has no connection to its alleged wrongdoing, then the principle of “each to his own” should apply universally—including to his son.

Known as “Lulinha,” or little Lula, he came under scrutiny in the investigation due to his connections with Brasília lobbyist Roberta Luchsinger. Deals she pursued with Antonio Camilo Antunes—the so-called “bald man of the INSS”—did not come to fruition. Still, questions remain about how the president’s son earns a living in Spain and whether his ties to Luchsinger go beyond unsuccessful business ventures. Lula has said he “would not vouch” for his son, though he is closely monitoring the case.

The president has voiced frustration over his approval ratings declining due to a scandal involving the financial system, Congress, and the courts. Last week, he tried to change the story by revoking the visa of a lower-level official from the Donald Trump administration, who had made up an agenda to justify a visit to former President Jair Bolsonaro. The move targeted about one-third of “independent” voters who, according to Genial/Quaest, mostly oppose Trump.

Beyond the rhetoric of sovereignty, Lula is also trying to revive a narrative focused on defending democracy. Attacks against Senator Flávio Bolsonaro are likely to follow this theme. An interview in which the former president’s son suggested that a solution to tensions with the Supreme Court might have to come from outside constitutional limits has already been shared by influencers close to both the presidential palace and the court.

If Mendes is turning the court’s plenary into a stage for signaling to the executive branch, the unity of the justices themselves remains uncertain. They cannot present a united front toward the executive if they remain deeply divided internally.

Casual political gatherings over the weekend in Brasília indicated that speculation about the possible retirements of justices Dias Toffoli and Alexandre de Moraes remains just that—speculation. For now, they seem confident that a Senate led by Davi Alcolumbre would not push forward with impeachment proceedings.

On Monday, Dino sent a separate message to the National Council of Justice (CNJ), chaired by Justice Edson Fachin. As the rapporteur in the appeal of a judge removed from office by the Rio de Janeiro court and the CNJ, Dino ruled that compulsory retirement can no longer be regarded as a disciplinary penalty.

However, the decision sends the case back to the CNJ, effectively prompting Fachin to give substance to the rhetoric of stricter judicial accountability. When Dino made his ruling public, Fachin was giving a lecture at a Brasília law school, reciting the seven principles meant to guide the judiciary—dignity, independence, impartiality, prudence, restraint, civility, and integrity. The Master scandal has called all of them into question. For now, the ability to establish a truce seems to be a trait limited to those under investigation.

*By Maria Cristina Fernandes

Source: Valor International

https://valorinternational.globo.com/

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U.S. seeks political signal from Brazil on critical minerals deal

Washington proposes tailored framework with price floor and financing as Brasília remains divided over openness

The Trump administration is awaiting a “clear political signal” from Brazil to move forward with a bilateral agreement on critical minerals, according to a spokesperson for the U.S. Embassy. The proposal is to establish a tailored cooperation framework between the two countries, including priorities such as setting a minimum price for these materials.

Critical minerals—used in advanced technologies in sectors such as defense and communications—have become a focal point of geopolitical competition.

The U.S. aims to build a partnership with Brazil capable of strengthening both countries’ industrial and technological bases. According to the spokesperson, Washington is interested in cooperating to expand processing capacity for these minerals.

More than 50 mining projects in Brazil have already been identified “that could contribute to international efforts to diversify and strengthen global supply chains for critical minerals,” the spokesperson said.

To enhance its position in the sector, the United States has outlined priorities, including discussions on a price floor, incentives for responsible investment in mining and processing that benefit both countries’ industrial bases, and streamlined licensing procedures. U.S. officials emphasize that the dialogue is intended to deliver mutual benefits.

Brazil holds the world’s second-largest reserves

Brazil’s rare earth reserves—estimated at 21 million tonnes—are emerging as a key element in global geopolitics. The country holds the world’s second-largest reserves but still lags in extracting these elements.

Given Brazil’s potential, the United States says the country could play a central role in developing global supply chains for critical minerals. “The U.S. International Development Finance Corporation (DFC) and the Export-Import Bank of the United States are offering more than $600 million in financing for ongoing critical minerals projects in Brazil, and we see potential for billions of dollars in additional investment,” the embassy spokesperson said, referring to U.S. government-backed institutions.

Seeking to deepen cooperation, the U.S. government will host an event this week to discuss opportunities for collaboration with Brazil in the sector. The Critical Minerals Forum will take place on March 18 in São Paulo and is expected to bring together more than 100 companies and representatives from state governments.

Brazil currently occupies a paradoxical position in the geopolitics of energy-transition minerals: it holds vast reserves but remains a minor producer, resulting in the underutilization of significant economic potential for income, industrialization, and technological development. This gap—typical of countries that fail to convert comparative advantage into competitive advantage—represents the main measurable economic opportunity for the coming decades.

As Valor reported, members of the Brazilian government say the critical minerals agenda remains stalled due to a lack of internal consensus on how open the country should be to foreign participation.

One faction within the Lula administration argues that imposing constraints on the sector at this stage would be counterproductive, given Brazil’s vast potential. These officials oppose agreements that could introduce restrictions on domestic production. This was also one of the main reasons Brazil declined to join a U.S.-led alliance on critical minerals and rare earths announced in early February.

Given the strategic importance of the issue, critical minerals are expected to feature on the agenda of a bilateral meeting between Lula and Trump, tentatively scheduled for March or April, though no date has been set.

Brazilian government sources argue that the country should engage with multiple partners rather than align exclusively with any single country or bloc. At the same time, they resist the idea that Brazil should remain merely a supplier of raw materials.

*By Sofia Aguiar  — Brasília

Source: Valor International

https://valorinternational.globo.com/

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