Broadband pushes telecoms revenue growth in Brazil

Of every R$10 that companies in the sector earned in 2024, a little over R$3 came from fixed broadband services

 

 

 

06/10/2025

Segment accounted for more than 30% of the sector’s revenue last year
Segment accounted for more than 30% of the sector’s revenue last year — Photo: Pixabay

Fixed broadband is increasingly solidifying its position as the second-largest revenue source for the telecommunications sector in Brazil. Out of every R$10 earned by telcos in 2024, a little over R$3 was generated from fixed broadband services.

Overall, fixed internet access ranks just behind mobile telephony, which accounted for 41.2% of the sector’s gross revenue last year, or R$4.12 of every R$10 earned. This information is part of a report prepared by the telecommunications operators’ union, Conexis Brasil Digital.

According to the union, the sector’s gross revenue—adjusted by Brazil’s official inflation index, IPCA—grew by 2.7% last year compared to 2023, reaching R$318.8 billion. This growth was driven primarily by fixed broadband, but also by the strong performance of mobile telephony (with a +4% real growth) and the industry (equipment manufacturers, with +4.8%).

“What drove [this result] the most was fixed broadband, in terms of revenue. It had a real growth of 6.1%,” said Marcos Ferrari, the president of Conexis.

The mobile telephony segment, in turn, benefited from the continued expansion of 5G, Mr. Ferrari said. “We saw significant growth in the number of 5G terminals, in smartphones. We had about 20 million customers at the end of 2023 and reached 40 million by the end of 2024.”

In the same annual comparison, the number of cities with 5G coverage jumped to 812 from 352. Additionally, the total number of antennas compatible with the technology more than doubled during this period, rising to 37,000 from 18,400.

“The higher offering pushes up the demand. The more cities with 5G technology, the faster people adopt it,” Mr. Ferrari said.

Despite this, the mobile segment’s revenue has struggled to grow when examining the figures over the past five years, after adjusting for inflation. Brazil ended last year with 263.4 million active mobile phone lines, an increase of 29.3 million accesses since the end of 2020. However, the gross revenue generated by the segment in 2024 (R$131.5 billion) was lower than that recorded in 2020 (R$133.7 billion, adjusted for the IPCA).

Conversely, fixed broadband has been growing both in real gross revenue and the number of users. The total number of fixed connections increased by 43.2%, reaching 52 million, between the end of 2020 and the same period in 2024. In the same timeframe, the gross revenue rose by 29.3% in real terms, reaching R$96.7 billion.

This positive performance led to fixed broadband accounting for slightly more than 30% of the sector’s revenue last year, an increase of nearly seven percentage points compared to 2020. In contrast, the share of mobile telephony in the telecommunications revenue pie shrank, falling from 42.1% to 41.2% over the past five years.

Last year alone, the number of broadband connections via fiber optics grew by 13.5%, driven primarily by the expansion of this technology in the Northeast region (+15.7%).

The service is expected to advance further in 2025, driven by fiber optic expansion. “Fiber is not only used for fixed broadband. It’s expanding across the country to handle and transmit all the data from 5G,” Mr. Ferrari said. Fiber is also the gateway for operators to offer entertainment, security (self-monitoring), and home automation services to subscribers, among other offerings.

By April, there were 52.7 million fixed broadband accesses in the country, according to the National Telecommunications Agency (ANATEL), up 6% year over year.

Considering only fiber connections, this percentage rises to 9.3%. The current cycle of fixed broadband expansion seems likely to continue in 2025, supported by the country’s economic growth, and extend into the coming years.

*By Rodrigo Carro  — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Brazil inflation slows to 0.26% in May, below market forecasts

Consumer prices index is up 5.32% in 12 months

 

 

06/10/2025 

Brazil inflation slows to 0.26% in May, below market forecasts
Brazil inflation slows to 0.26% in May, below market forecasts — Photo: Marcello Casal Jr/Agência Brasil

Brazil’s official inflation rate slowed to 0.26% in May, down from 0.43% in April, marking the lowest reading for the month since 2023, when it reached 0.23%, according to the Brazilian Institute of Geography and Statistics (IBGE).

The result came in well below the median forecast of 0.34% from 30 financial institutions and consultancies surveyed by Valor Data, Valor’s financial data provider. It also undershot the lowest estimate in the range, which spanned from 0.29% to 0.43%.

Over the 12 months through May, the Broad Consumer Price Index (IPCA) rose 5.32%, compared with 5.53% in the 12 months through April. Market expectations compiled by Valor Data had pointed to a 5.40% increase, with projections ranging from 5.35% to 5.51%.

Despite the slowdown, the 12-month inflation rate remains above the upper limit of the target range set by the National Monetary Council (CMN) and pursued by Brazil’s Central Bank. The inflation target for 2025 is 3%, with a tolerance margin of 1.5 percentage points in either direction.

Among the nine expenditure groups that make up the IPCA, five posted slower increases from April to May: food and beverages (from 0.82% to 0.17%), apparel (from 1.02% to 0.41%), health and personal care (from 1.18% to 0.54%), personal expenses (from 0.54% to 0.35%) and communication (from 0.69% to 0.07%).

Household goods shifted into deflation, with prices falling 0.27% after rising 0.53% in April. Housing costs accelerated from 0.14% to 1.19%. Education maintained a steady pace at 0.05%, while transportation continued in deflationary territory, moving from -0.38% to -0.37%.

The Brazilian statistics agency calculates the IPCA based on the consumption patterns of households earning between one and 40 times the minimum wage, covering 10 metropolitan regions as well as the cities of Goiânia, Campo Grande, Rio Branco, São Luís, Aracaju, and Brasília.

Less widespread increases

Inflation was less widespread in May, with the diffusion index—which measures the share of goods and services that recorded price increases—falling to 59.7%, from 66.8% in April, according to Valor Data. Excluding food, a particularly volatile component, the index dropped to 59.8% from 64.1%.

Core inflation

The average of five core inflation measures monitored by the Central Bank eased to 0.30% in May from 0.50% in April, based on estimates from MCM Consultores. Over the past 12 months, the average of these core indicators edged down to 5.17%, from 5.26%.

*By Lucianne Carneiro — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

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Tax reform already reshapes logistics strategies

Companies prepare for end of tax incentives in 2033; impact on new projects already visible

 

 

 

 

06/09/2025 

Brazil’s tax reform is beginning to influence corporate logistics strategies for new investments. The prospect of ending tax incentives and changing the point of tax collection starting in 2033 is already dampening interest in new projects in states that currently attract companies through generous fiscal benefits, according to business executives and consultants involved in the transition to the new model.

Among the states potentially affected, from the private sector’s perspective, are Santa Catarina, known for its import-related incentives; Goiás, which supports the pharmaceutical industry; Espírito Santo, which also favors imports and has attracted sectors like automotive and retail; and Minas Gerais, home to one of the most emblematic cases of tax incentives: the city of Extrema.

In Extrema, logistics operators say demand for existing warehouses remains strong, but appetite for new developments is waning.

According to Sérgio Fischer, CEO of Log CP, a developer and manager of logistics and industrial warehouses, clients have said that rental prices in Extrema were a “non-issue” and could be up to three times higher due to the significant cost reduction from tax incentives. Log CP previously owned a warehouse in Extrema but sold it and has no plans to return. “It’s a city with fewer than 60,000 residents and nearly the same amount of warehouse space as Cajamar (São Paulo), which serves Brazil’s largest city,” Mr. Fischer said.

On the other hand, demand is rising for warehouses closer to major consumer hubs such as São Paulo and Recife—a key logistics center for the Northeast—executives report.

Logistics operator Multilog, which has a R$900 million investment plan over the next three years, has decided to allocate more than half of that amount to São Paulo, largely due to the tax overhaul. “We’ve been getting many inquiries from clients who are already looking ahead to 2033. From that point forward, inventory will need to be closer to consumers. A natural realignment will take place,” said CEO Djalma Vilela.

Pedro Moreira, president of ABRALOG (Brazilian Logistics Association), said the reform is already affecting the price per square meter of fulfillment centers, which is rising around São Paulo and Recife. The Manaus Free Trade Zone, which will retain its incentives, is also drawing increased interest from companies, he said.

Indeed, prices are climbing in São Paulo, according to data from Colliers International. In Guarulhos, the average price per square meter for logistics projects reached R$37.80 in the first quarter of this year, a 16.6% increase compared to the same period in 2024. In Cajamar, prices rose 8.5%, to R$31.38. Even in Extrema, prices increased to R$28.65—a 5.3% rise year over year.

According to analysts and executives, the lack of a sharp correction reflects market resilience. Mr. Fischer pointed out that cities that grew thanks to tax incentives won’t become “ghost towns” overnight, as the market will adjust based on demand-driven pricing.

Moreover, a lengthy transition period lies ahead before incentives are phased out, noted Maurício Lima, partner at logistics consultancy Ilos. “No company will relocate while it can still enjoy the benefit.” He emphasized that current impacts are limited to new projects still in the planning stages.

Under the new rules, the transition away from the Tax on Circulation of Goods and Services (ICMS), the main instrument used by states, won’t begin until 2029 and will run through the end of 2032, noted Douglas Mota, a tax partner at Demarest. During this period, a compensation fund will reimburse companies for lost incentives.

Mr. Mota added that the reform’s impact comes not only from the loss of tax breaks, but also from the shift in the tax collection model—from the point of production or storage to the point of consumption. “They’ve tightened the screws on both ends.”

Long-term lease contracts may help smooth the transition. Mariana Hanania, director of market research at consultancy Newmark, noted that Extrema’s growth was driven largely by BTS (build-to-suit) contracts tailored to specific tenants. “These are long-term contracts with tenant guarantees,” she said, adding that new developments in those areas may now be limited.

Simone Santos, partner at consultancy Binswanger SDS, said the long timeline before the reform takes full effect still makes these regions attractive. “We’re still seeing major leases,” she noted, citing the announcement in late May of a fully pre-leased 40,000 square meters warehouse by Fulwood in Extrema.

These locations also offer other advantages, such as strong logistics infrastructure, skilled labor, established industrial ecosystems, and the local economy. Santa Catarina, for example, is expected to see limited impact, according to two executives with operations in the state.

Gustavo Serrão, CEO of Espírito Santo’s port authority Vports, acknowledged that the reform presents challenges for the state but said the government is investing in greater efficiency, and existing infrastructure supports business retention. “There’s an exit barrier. Incentives helped the state build a robust infrastructure, and the integrated supply chain is resilient,” he said. “The challenge now is to use the transition to boost productivity.” He also cited potential financial incentives from state banks to help attract investment.

The impact of the changes will vary across sectors. The most affected will likely be those in which tax considerations weighed heavily in project decisions; typically high-value, lightweight products like pharmaceuticals and electronics, Mr. Lima said. “Heavier products, like large appliances, already leaned more on logistics convenience than tax advantages.”

Some e-commerce firms and import-heavy sectors that traditionally benefited from incentives will also need to rethink their strategies, said Vilson Silva, CFO at ID Logistics.

“In 2033, the impact will be significant. From a logistics standpoint, this will be an improvement. Today, there are some irrational practices, like a client who produces in São Paulo, serves customers in São Paulo, but ships inventory to Goiás for storage, only to bring it back,” Mr. Silva said.

*By Taís Hirata and Ana Luiza Tieghi — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Government warns of AI-driven disinformation as national security risk

Deepfake videos and synthetic content targeting elections and public figures prompt calls for urgent regulation ahead of 2026 polls

 

 

 

 

06/09/2025

The growing use of artificial intelligence to create highly realistic fake content has raised alarm bells within the Brazilian government, especially as the country approaches the 2026 general elections. Officials are particularly concerned with the manipulation of real data to produce convincing fake videos—spread widely on social media—that can mislead the public or facilitate digital scams. Authorities now frame the issue as not just an electoral or regulatory matter but one of public safety and national defense.

Three weeks ago, Valor reported on a case in Argentina where an AI-generated “deepfake” video may have influenced the results of Buenos Aires’ city council elections on May 18. The video, widely circulated the night before the vote, appeared to show former President Mauricio Macri endorsing Javier Milei’s party, even though Mr. Macri was in fact a political rival. The video used AI to reproduce Mr. Macri’s appearance and voice with striking accuracy.

The capital is a traditional stronghold of Argentina’s right wing. But when results came in, Mr. Milei’s party led with 30% of the vote, followed closely by the left-leaning Peronists with 27%. Mr. Macri’s party finished third, with just 16%—a surprising defeat in its own stronghold.

In Brazil, concerns have intensified after similar cases surfaced involving President Lula and Finance Minister Fernando Haddad. In one instance, a fake video circulated showing Mr. Lula supposedly announcing that the government would grant Bolsa Família cash-transfer benefits to women caring for reborn dolls—lifelike dolls that resemble newborns. The video used AI-driven lip-syncing to manipulate a real interview in which Mr. Lula was actually talking about soccer.

In another case, a fake video showed Mr. Haddad saying the government would tax pregnant women and pet dogs. The manipulated footage was based on a real speech where he had discussed taxing online betting platforms. These videos gain traction precisely because they combine authentic content with manipulated audio or visual elements, lending them false credibility.

Attorney General Jorge Messias, who leads the government’s effort to hold digital platforms accountable, told Valor that neither Brazil nor other countries are prepared for the chaos caused by AI, which he described as a “dystopian and unregulated technology.” He noted that while electoral technology has evolved, such as the now-regulated mass messaging systems used illegally in 2018, the role of AI in elections will be far more prominent in 2026.

In the meantime, AI is also being used in digital scams, many of which target vulnerable groups such as children, teenagers, and the elderly. A notable example was the so-called “Pix crisis,” when a false rumor spread that the government would tax the country’s instant payment system. Scammers took advantage by falsely charging fees for money transfers.

According to Mr. Messias, the lack of regulation has turned the debate over AI and digital platforms into an issue of public safety. “Street crime has moved onto the platforms,” he said. “These are the digital pickpockets.”

While the Supreme Court is currently reviewing platform liability, the issue is also being addressed in Congress. The Attorney General’s Office (AGU), in partnership with the President’s Chief of Staff and the Presidential Communication Secretariat (SECOM), is drafting new legislation to be submitted for President Lula’s approval before reaching Congress.

In the absence of stronger legislation, the AGU, through its National Office for the Defense of Democracy (PNDD), has been working to remove or flag false and criminal content on social media platforms. In December, the office secured the removal of 12 fake videos about Mr. Lula’s health from YouTube. At the time, the president was recovering from brain surgery following a fall, but some videos falsely claimed he had died. YouTube removed seven of the 12 flagged videos within 24 hours via an out-of-court process.

YouTube, which sees around 20 million videos uploaded daily, stated that it uses AI to identify potentially harmful or manipulated content, which is then reviewed by humans. Users can also report misleading videos, which may be removed or labeled as disinformation. The company emphasized that the use of AI alone does not necessarily constitute a policy violation and that each case is reviewed individually under its guidelines and user rights.

Between January 2023 and May 2025, the PNDD submitted 39 out-of-court takedown requests. Of those, 23 were fully granted, two partially accepted, six rejected, and eight remain pending. In court, five requests were granted, two were rejected, and five await a ruling.

Over time, the PNDD has found that applying a “disinformation” label is often more effective than removing content entirely. Labeling allows users to access the content while being explicitly warned about its misleading nature—a solution the platforms may find less invasive.

Meta, which owns Facebook and Instagram, did not comment when contacted.

*By Andrea Jubé — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Foot-and-mouth outbreaks in neighboring countries keep Brazil on alert

Industry leaders say resurgence of the disease in the country is “only a matter of time”

 

 

06/09/2025

Brazil is transitioning from a vaccination-driven approach to one that depends on constant vigilance, according to CNA

Brazil’s recent upgrade in sanitary status opens new opportunities for cattle and pig farmers as well as meatpackers, but it also raises the stakes for surveillance and enforcement in rural areas. The main challenge is to keep the disease out of the herds and avoid having to resume vaccination.

Still, many players in the livestock chain believe the return of the virus is inevitable. The question is when it will happen—and whether Brazil will be ready to respond to such a sanitary emergency. Unlike poultry and pig farming, which are largely carried out in controlled environments, Brazil’s extensive cattle ranching in open pastures makes containment much harder.

Outbreaks in neighboring countries like Uruguay serve as warnings. Uruguay saw cases of foot-and-mouth disease (FMD) even after receiving certified FMD-free status without vaccination and continues to immunize its herds. In Germany, the disease reappeared after more than 40 years, though vaccination was not made mandatory.

“The question isn’t if FMD will return to Brazil, but when—and how we’ll respond,” said Emílio Salani, vice president of the National Union of the Animal Health Products Industry (SINDAN), who was involved for decades in negotiations for the gradual phaseout of vaccination. “If we hesitate and need to restart vaccination, timelines will be extended, and the entire chain will suffer major losses.”

Among neighboring countries, Venezuela is the main concern. It lacks official FMD status and offers little transparency about its situation. Bolivia, however, received FMD-free certification without vaccination from the World Organization for Animal Health (WOAH) last week. Argentina and Paraguay have not reported recent cases but continue to vaccinate.

Currently, studies show the virus is not circulating in Brazil, Mr. Salani said. But risks remain due to the movement of infected animals across dry borders, as well as smuggling and cattle theft. Infected goods or individuals arriving at ports and airports also pose a threat.

Mr. Salani said the ideal solution would be to create a “protective ring” on the Venezuelan border, including donations of vaccines and financial resources. “The dry borders are our Achilles’ heel. One sick animal is enough [to jeopardize our status],” he warned.

“The challenge is much greater because cattle roam and move through open environments,” said João Paulo Franco, livestock production coordinator at the Brazilian Confederation of Agriculture and Livestock (CNA). He noted that Brazil is transitioning from a vaccination-driven approach to one that depends on constant vigilance. He emphasized that this “active surveillance” will rely heavily on farmers to spot symptoms and quickly alert the authorities.

Mr. Franco said the key to maintaining FMD-free status will be individual traceability of cattle and buffalo. A federal government plan launched at the end of 2024 aims to identify all livestock within seven years.

Lack of personnel

The need to uphold high safety standards also involves increasing personnel and investment, said the National Union of Federal Agricultural Tax Auditors (ANFFA Sindical). The organization said the new scenario will require greater attention from the state and called for adequate infrastructure to support the “new and rigorous surveillance and sanitary control measures” that will be needed.

“This progress comes at a critical moment, when production could be at risk if Brazil moves forward with privatizing inspections—a measure that weakens food safety and undermines international trust in our inspection system,” said Janus Pablo Macedo, president of ANFFA Sindical.

The Agriculture Ministry recently hired 200 new auditors approved in the 2024 public exam and 240 animal and plant health technicians. The union is pressing for additional hires from the waiting list, citing a shortage of professionals and increasing demand from the agribusiness sector.

Roberto Perosa, president of the Brazilian Meat Exporters Association (ABIEC), said a proposal to allow companies to conduct carcass inspections before and after slaughter—under the supervision of federal auditors—could benefit the sector. The idea, which is still under discussion at the Agriculture Ministry, has drawn criticism from the union.

Mr. Perosa also supports having agribusinesses contribute to the fund used to pay overtime for public inspectors in this area.

The journalist traveled at the invitation of ABIEC.

*By Rafael Walendorff — Paris

Source: Valor International

https://valorinternational.globo.com

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Government hammers out deal to offset IOF increase

Agreement negotiated by Finance minister includes tax hike on bets, ending breaks for LCI and LCA

 

 

06/09/2025 

After a five-hour meeting, Finance Minister Fernando Haddad and congressional leaders agreed on a package of measures designed to offset the revenue loss from partially scaling back a decree that raised the Financial Transactions Tax (IOF). The proposals include higher taxes on sports betting and the elimination of the income tax exemption for LCI and LCA fixed-income securities. Broader structural measures, such as cuts to tax benefits not enshrined in the Constitution and administrative reform, were also discussed.

The more immediate proposals will be implemented via a provisional measure (MP), which takes effect immediately but must still be approved by Congress. In the case of ending the income tax exemption for LCI and LCA, the change would take effect in 2026 due to Brazil’s fiscal annuality rule.

The new MP would allow the government to reissue the IOF decree with lower tax rates. These changes still require approval from President Luiz Inácio Lula da Silva, who is due to return from France on Monday evening (9).

The revised plan is expected to reduce the fiscal impact of the IOF decree by one-third. According to the Finance Ministry, this shortfall will be offset by the MP. In its current form, the decree was projected to generate R$19.1 billion in 2025 and R$38.2 billion in 2026.

The government presented the new proposals after intense backlash from lawmakers, who threatened to overturn the original decree. Chamber of Deputies Speaker Hugo Motta said the alternative measures are less harmful than the original tax hike.

“The MP provides the government with financial compensation, but it’s much less damaging than the continuation of the original IOF decree. Plus, we’ve opened the door for a broader and more meaningful debate on tax exemptions,” Mr. Motta said.

One key element of the MP is raising the tax rate on Gross Gaming Revenue (GGR) from 12% to 18%, aligning with the government’s original proposal to regulate the betting sector. GGR refers to the total amount wagered, minus the payouts to players.

Another measure targets incentives for LCI and LCA investments. According to Mr. Haddad, these instruments—currently exempt from income tax—will now be taxed at 5%. “These securities will no longer be tax-free but will still enjoy significant incentives. We’re narrowing the gap between 0% and 17.5% down to 5%,” he explained.

The MP will also standardize the Social Contribution on Net Profit (CSLL) paid by financial institutions. The preferential 9% rate for fintechs will be eliminated, leaving the standard rates of 15% and 20%.

Under the revised IOF decree, one significant change involves the tax on reverse factoring—a form of early payment to suppliers by banks. This measure had drawn strong criticism from the financial and retail sectors.

“The most affected part of the IOF will be on risco sacado. The fixed component of this tax will be removed, and the daily rate will be recalibrated to better align with the existing credit system,” Mr. Haddad said. The original decree set a fixed IOF rate of 0.95% for reverse factoring, along with a daily rate of 0.0082%. The fixed rate will be eliminated, and the daily rate adjusted.

As for Brazil’s broader system of tax expenditures, Mr. Haddad said the plan is to reduce them by at least 10%, although the exact figure has yet to be finalized. According to reporting by Valor Econômico, essential items such as the basic food basket, Simples Nacional regime, and the Manaus Free Trade Zone will be spared.

“We agreed here on cutting tax expenditures by at least 10%. Everything will be subject to deliberation by Congress. The Executive’s initiative is based on input from both congressional presidents and leaders who participated in the meeting,” Mr. Haddad stated.

Mr. Motta emphasized that the specifics of how tax incentives will be trimmed remain under discussion. “In the coming days, we will primarily target exemptions found in infra-constitutional legislation. There’s a suggestion to cut by 10%, but we might implement this gradually. The final structure is still up for debate,” the Chamber speaker said, adding that political feasibility will be a key consideration.

* By Jéssica Sant’Ana and Andrea Jubé — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Disapproval of Lula 3 at highest level, at 57%, Genial/Quaest poll shows

President’s popularity remains negative; perception of economy shows improvement

 

06/04/2025 1

Disapproval of President Lula’s government reached 57% in May, the highest level since the start of his third term, according to a Genial/Quaest poll released on Wednesday (4). In the previous survey conducted in March, the disapproval rate was 56%. Approval now stands at 40%, down from 41% in the last poll, which had already marked the worst result since official records began.

The changes are within the margin of error of two percentage points. Since January, disapproval has risen by 8 points, while approval has dropped by 7 points. The latest edition of the bimonthly survey interviewed 2,004 respondents between Thursday (29) and Sunday (1).

Negative evaluations of President Lula’s government also increased slightly, reaching a historical peak of 43%, up from 41% in March. Positive evaluations fell from 27% to 26%. Those rating the administration as “regular” dropped from 29% to 28%. The percentage of Brazilians who believe the country is heading in the wrong direction rose to 61%, up from 56% in March and 50% in January. Meanwhile, 32% believe Brazil is on the right track, compared to 36% and 39% in the two previous rounds.

For the first time, disapproval of President Lula’s government surpassed approval among Catholics, at 53% to 49%. In March, approval and disapproval were tied at 49%. Catholics had previously shown more support than Evangelicals, a group historically more critical of the president. In the latest survey, disapproval among evangelicals stood at 66% (down from 67%), while approval was 30% (up from 29%).

The survey also indicates worsening figures in Mr. Lula’s traditional support voting bloc. His government is disapproved of by 54% of women, 47% of those with only basic education, and 49% of those earning up to two times the minimum wage—all segments showing an upward trend within the margin of error.

Regionally, President Lula’s approval outweighs disapproval only in the Northeast, where 54% support the government and 44% oppose it. In the more populous Southeast region, disapproval stands at a record 64%, while it reaches 62% in the South and 55% in the Central-West.

Improved economic perception

Despite confirming Mr. Lula’s popularity crisis, the survey shows an improvement in economic perceptions. The percentage of respondents who believe Brazil’s economy has worsened fell to 48%, down 8 points from 56% in March. Meanwhile, 18% say the economy has improved (up from 16%), and 30% believe it has stayed the same (up from 26%).

There was also some improvement in approval ratings among those familiar with recent government initiatives. For the proposal to exempt income tax for those earning up to R$5,000 per month, 56% had heard of it, and 45% approved. Regarding the new gas voucher program (Vale-Gás), 59% were aware of it, and 49% approved.

In a report released alongside the poll, political scientist and Quaest CEO Felipe Nunes described the scenario as a paradox, attributing the contradiction to the “widespread impact of negative news.” He noted that cases such as the social security fraud scandal at the National Institute of Social Security (INSS) have diluted positive impacts in other areas.

According to the survey, 56% believe the current Lula administration is worse than his first two terms. In comparison with former President Jair Bolsonaro’s administration, 44% believe Lula’s current term is worse, while 45% think the government is performing below expectations.

Social security scandal and IOF tax increase

Some 82% of respondents said they were aware of the INSS fraud scandal. Among them, 31% blamed Lula’s government, 14% cited the INSS itself, and 8% pointed to Bolsonaro’s administration—the same percentage as those blaming the organizations that forged retirees’ signatures. Another 26% said they did not know or did not respond.

Half of the respondents (50%) support opening an Investigative Parliamentary Committee (CPI) to investigate the INSS scandal, while 43% believe a Federal Police investigation is sufficient and that the opposition is only seeking to undermine the government.

Regarding the recovery of embezzled funds, 52% said the government should focus solely on reclaiming assets frozen from the implicated organizations, while 41% said the money should be returned even if public funds are needed.

Regarding changes to the Tax on Financial Transactions (IOF), fewer respondents were aware of the issue (39%) than those unaware (58%). Of those who knew, 41% approved of the government’s decision to reverse the IOF hike on investment funds, while 36% disapproved.

However, regarding the maintenance of the IOF increase on dollar purchases by individuals and remittances abroad, 50% said the government was wrong, and 28% said it was right.

Violence and corruption among top concerns

Violence remains the top concern for Brazilians, cited by 30% of respondents. It is followed by social issues (22%) and the economy (19%).

The fourth spot saw a shift compared to March: health, previously ranked fourth with 12%, was displaced by corruption, now cited by 13% (up from 10%). Health dropped to fifth place with 10%. Education ranked sixth at 6%.

*By Joelmir Tavares, Valor — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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BlackRock sees fiscal issues, elections holding more sway over exchange rate

Head of research and emergin-market bond manager Pablo Goldberg believes Brazil could benefit from U.S. capital outflows

 

 

06/04/2025

The interest rate shock announced by Brazil’s Central Bank at the end of last year, which pushed the Selic to 14.75%, helped the real recover against the dollar throughout this year. However, anchoring the Brazilian currency can’t rely solely on high interest rates, especially since rates will eventually be cut. That points to the need for greater focus on local risk factors, according to Pablo Goldberg, head of research and fixed income manager for emerging markets at BlackRock.

“What’s more important is entering a process where you reduce the embedded risk in assets, which will allow you to lower the real’s carry without driving investors away from the country,” Mr. Goldberg said in an interview with Valor. “What’s really high right now is not just the interest rate differential, but the risk that these high rates need to compensate for [in order to keep the currency anchored].”

When analyzing the impact of interest rate differentials on the domestic exchange rate, Mr. Goldberg explains that the real’s anchoring through high rates is a gradual, day-to-day process—while a single piece of news that worsens the perception of risk can sharply devalue the currency in just one session.

“There’s a well-known saying: currency appreciation goes up like a staircase, step by step, but depreciation goes down like an elevator, all at once. Carry alone gives the currency a purpose, but high interest rates don’t justify themselves.”

“We usually think in terms of ‘carry to risk’—the interest rate differential adjusted for risk. The higher the risk, the higher the carry. Today, the real offers good carry for the associated risks,” says the BlackRock manager, who maintains a constructive view on the Brazilian currency in the short term.

Due to the real’s characteristics, Mr. Goldberg sees no obstacles to its continued appreciation in the near future. “Besides the carry, valuation is favorable [for the real]. The Brazilian exchange rate is not overvalued, so fiscal matters, elections, and the monetary policy cycle will determine Brazil’s weight in global portfolios,” he explains.

Regarding the electoral cycle, Mr. Goldberg says that with fiscal issues in focus, any candidate who, during the campaign, signals an intent to ease the country’s debt trajectory will automatically become the market favorite. “I won’t name names, but I think those who provide the market with confidence that this particular area of policy will be well managed will do well.”

On Brazil’s monetary policy cycle, Mr. Goldberg aligns with market consensus and sees little room for further rate hikes, with the remaining question being when the Central Bank will begin cutting the Selic. “The current level of restriction [from the rate] is significant. But the economy still hasn’t responded as one might expect at this level of restriction. Perhaps that’s due to fiscal factors,” he says.

“Although inflation expectations are falling, they’re still significantly above the Central Bank’s target, so I don’t expect a sharp monetary easing any time soon—unless the economy slows very quickly, which also seems unlikely,” he adds. Mr. Goldberg believes the first rate cuts could come at the end of this year or possibly only in 2026.

Not knowing exactly when the Central Bank will cut rates doesn’t mean investors should stay away from the interest rate market, Mr. Goldberg argues. “It’s not just about when rate cuts will begin, but about the market pricing in the DI [interbank deposit] curve,” he says. “Those building positions now are betting rates won’t go higher, and they’re collecting yield for that. It’s more about earning carry than capital appreciation for now.”

BlackRock does not detail its allocations, but Mr. Goldberg says he favors Brazilian positions in sovereign bonds, corporate bonds, and the currency itself. He believes Brazil—like other emerging markets—could benefit from global investors diversifying away from U.S. assets due to a number of factors.

“I’m not saying global assets are now more attractive than U.S. assets, but compared to before, there’s been a small decline in the ratio between non-U.S. and U.S. assets,” he notes.

Mr. Goldberg attributes this shift to uncertainties around Donald Trump’s trade policies and their potential effects on the U.S. economy (whether through inflation or a slowdown); the challenging position the Federal Reserve may find itself in as a result; the growing belief that artificial intelligence and tech are not exclusive to the U.S.; and America’s own fiscal situation, which could prompt global investors to seek safe-haven alternatives to U.S. Treasury bonds.

“All of this opens up opportunities in other markets and geographies, meaning a global weakening of the U.S. dollar,” concludes Mr. Goldberg.

*By Arthur Cagliari — São Paulo

Source: Valor International

https://valorinternational.globo.com/

 

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Embraer invests in India to expand in Asia

Brazilian manufacturer opens subsidiary and office in the country; considers setting up final assembly line

 

 

 

 

06/04/2025 

Embraer has stepped up its bet on the Asian market with the launch of a new subsidiary and office in India, where the Brazilian company currently has a modest presence. CEO Francisco Gomes Neto told Valor that the country offers significant business opportunities, particularly in the defense and commercial aviation sectors.

On Tuesday (3), an Embraer team visited the Brazilian Embassy in New Delhi to present its growth plans for the region. Earlier this year, the company established a subsidiary in India to support its business expansion and recently announced the opening of a new office.

India is not the only Asian country on Embraer’s radar. China, the world’s second-largest aviation market, has also been a key target. “We have 4,000 aircraft worldwide, and only 49 are here [in India]. We are heavily focused on the KC-390 [the defense aircraft being evaluated by the Indian government], and discussions are advancing. However, we also want to sell executive and commercial jets,” Mr. Gomes Neto said.

Of Embraer’s fleet in India, only 10 aircraft are in the commercial division, operated by Star Air. Mr. Gomes Neto noted that India’s regional aviation market relies heavily on turboprop aircraft, an area where Embraer sees a competitive edge. “There has been substantial investment in roads and railways, which reduces the competitiveness of smaller aircraft. We believe our planes can fill those gaps,” he said.

According to Embraer’s estimates, India will require approximately 500 aircraft over the next 20 years, with around 300 of those expected to be delivered within the next decade. A significant portion of orders is likely to focus on replacing turboprops, as there are currently about 100 operating in the country.

India’s vast geography contrasts with the limited range of turboprops, typically around 500 km. Embraer’s jets, besides being faster, can fly approximately 6,000 km, enabling direct connections between distant cities. Part of Embraer’s strategy to strengthen its position in India involved setting up a subsidiary, a process completed in March. This week, the company also announced a new office.

João Bosco da Costa Júnior, vice president of Embraer’s defense and security business, recalled that three years ago the company had no employees in India. All operations were managed from Singapore, about a five-hour flight from New Delhi. “Since we started our growth strategy here, we’ve hired people and now have 10 positions,” he said. The company’s goal is not only to build a sales team but also to hire engineers and technicians locally.

The subsidiary also supports Embraer’s effort to sell the KC-390 to the Indian Air Force. The Brazilian manufacturer is competing against industry giants such as the Lockheed C-130 Hercules and the A400M Atlas.

India plans to order between 40 and 80 aircraft, with a decision expected by 2026. One of the requirements is that 50% of the aircraft content must be produced locally, which helped drive Embraer’s decision to establish a presence in the country. Depending on the size of the order, the company is also considering setting up a final assembly line in India.

“The defense market in India is extremely significant. The Asia-Pacific region has seen considerable growth and now has an aging military fleet that will need to be replaced,” Mr. Costa Júnior pointed out. Embraer estimates the region will account for about 23% of global military aircraft demand in the coming years.

Embraer’s interest in the region extends beyond India. As previously reported by Valor, the company is eyeing opportunities in China, especially amid the current geopolitical turbulence. American manufacturer Boeing has been directly impacted by the trade tensions fueled by U.S. President Donald Trump, with the Chinese government even halting deliveries of Boeing planes.

China’s Comac offers aircraft with 80 to over 160 seats, while Embraer’s models range from 110 to 146 seats. The company already operates a fleet of around 90 aircraft in China, mainly ERJ-145s and E190s. To boost its prospects in the Chinese market, Embraer has hired Patrick Peng, formerly of Airbus and GE, to help drive business development.

The Brazilian manufacturer closed the first quarter with its highest revenue since 2016, totaling R$6.4 billion, a 44% year-over-year increase. Net income reached R$434 million, up 204.1%. Embraer’s order backlog now stands at $26.4 billion, the largest in its history.

However, the company also faces challenges. Chief among them is the Chapter 11 bankruptcy filing by Azul, currently its largest customer for the E2 model. “We have several aircraft scheduled for delivery, either directly to Azul or through lessors. We are monitoring the situation closely. What we hear is that Azul’s fleet strategy is to replace E1 jets with E2s, and that plan remains in place,” Mr. Gomes Neto said. According to him, the involvement of American Airlines and United in Azul’s restructuring process is a positive sign.

Another concern involves U.S. tariffs. Recently, Embraer delivered a commercial aircraft to an American customer under the new tariff structure. However, due to the U.S.-made content in the aircraft, the tax rate was significantly lower than the standard 10%. Despite the higher tariff, no orders have been canceled.

(The reporter’s travel costs were covered by IATA.)

*By Cristian Favaro — New Delhi

Source: Valor International

https://valorinternational.globo.com/

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Blockchain could have prevented INSS fraud, experts say

Features like records immutability, traceability, and programmability could block unauthorized deductions from pension benefits

 

 

 

 

06/03/2025 

Blockchain technology could have prevented a multi-billion fraud that hit Brazil’s National Institute of Social Security (INSS), according to technology specialists consulted by Valor. Key features of blockchain—such as immutability of records, traceability, and programmability—would help stop unauthorized deductions from social security benefits.

Edilson Osório, founder of the blockchain authentication company OriginalMy, notes that blockchain alone wouldn’t resolve all problems. However, the fraud could have been entirely avoided by combining blockchain networks with digital identity systems.

The main advantage is that all information recorded on a blockchain is immutable. In other words, it cannot be edited or altered once entered. According to Mr. Osório, tying the authorization of payroll deductions to a signature that validates a retiree’s digital identity would ensure verified consent and offer irrefutable proof of when that consent was given.

The Brazilian government already uses blockchain to register the National Identity Card (CIN), which includes a digital version integrated with the gov.br platform. Since 2023, the “b-Cadastros” solution—a shared blockchain registry developed by the Federal Revenue Service in partnership with Serpro—has been used to issue the CIN. The document aims to centralize the CPF (individual taxpayer number) as the sole reference for accessing public services like SUS (public healthcare), INSS, Bolsa Família, and voter registration. Public Management Minister Esther Dweck has stated that the CIN seeks to eliminate fragmented civil records.

However, the INSS systems affected by the fraud do not yet use such technology. Caroline Nunes, founder of InspireIP—a blockchain-based intellectual property registry platform—says that Brazil’s social security systems suffer from fragmented data across different databases developed in various generations of IT infrastructure. “The INSS systems are connected via APIs or other types of interfaces. We’re dealing with information transfers between systems and agencies,” she explains.

All information registered on a blockchain is immutable: it cannot be edited or altered.

Murilo Cortina, head of new business at QR Asset, argues that the current system is vulnerable to unauthorized changes, deletions, or data entries by individuals with privileged access. “Blockchain technology, which underpins the entire crypto ecosystem, proposes a new architecture for storing and verifying data. Each record is validated by multiple independent parties—called nodes—that share an identical copy of the full history. This eliminates the risk of unilateral manipulation and ensures that everyone sees the same version of events,” he says.

According to Ms. Nunes, it would be possible to migrate all systems to an interoperable blockchain shared among government agencies, such as the Drex platform currently under development by Brazil’s Central Bank. Drex is a “tokenized” infrastructure for the financial system. “Drex could significantly advance blockchain identity. You could register the ID on the network just like a physical identity card, but on the blockchain,” she suggests.

A critical challenge would be adapting the system’s usability for retirees, many of whom are not comfortable using digital platforms. Mr. Osório proposes linking a digital identity app to a physical card, which could be used to sign authorizations. “A person would go to an INSS office, insert the card, and enter a PIN. Then, the office could proceed on their behalf,” he explains.

When asked for comment, the INSS said it monitors blockchain developments but has no active studies regarding its implementation. “While the INSS monitors the evolution of technologies such as blockchain and recognizes their potential for enhancing security and transparency, we inform that there are currently no ongoing studies for its specific adoption in payroll-deductible or association-linked discounts,” the institute said in a statement.

*By Ricardo Bonfim — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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