Debt issuances account for 33% of Brazilian companies’ liabilities; share more than doubles in ten years
02/20/2025
Capital markets have reached a record share of total corporate debt in Brazil, driven by a surge in fixed-income issuances last year. This share rose to 33% in 2024, up from 31% in 2023, according to a study by consultancy firm FTI commissioned by Valor.
Looking at a broader timeframe, the shift in corporate debt composition is even more striking. A decade ago, capital market securities accounted for just 15% of corporate liabilities.
The 2024 figures represent a stock of R$2.2 trillion in debt securities, reflecting an average annual growth of 16.6%.
This increased presence of capital market instruments on balance sheets has not only diversified companies’ funding sources but also introduced new challenges in renegotiating debt with creditors. These challenges come at a time when Brazil is experiencing a record number of bankruptcy filings and out-of-court restructurings.
Recent cases, such as Americanas, Agrogalaxy, and Southrock, involved a significant base of retail investors, prompting the need for debt holder organization—an unprecedented development for individual investors generally unfamiliar with restructuring environments or creditor meetings, which are common in these processes. Another significant case involves the supermarket chain St Marche, which filed for precautionary measures to renegotiate debts and has high exposure to Agribusiness Receivables Certificates (CRAs), widely distributed among retail investors.
Eduardo Parente, director at FTI, noted that this trend has changed the dynamics of debt restructuring negotiations, adding a new layer of bureaucracy to processes that often require agility. The debt products that have seen the most growth in recent years are CRAs and Real Estate Receivables Certificates (CRIs), popular among retail investors due to their income tax exemption. “This made the instrument widely popular,” he said.
Mr. Parente explained that the negotiation dynamics have shifted precisely at a time when restructuring cases are on the rise. “Representatives of CRA and CRI holders are more constrained, and the process has become slower,” he said.
Before the rise of these products, companies and their advisors typically negotiated exclusively with bank creditors and foreign bondholders, who are more accustomed to these negotiations and organized for restructuring discussions. Now, companies must also convince thousands of retail investors. “This complexity brings new bureaucratic and legal challenges,” Mr. Parente added.
Fragmented debt
Bruno Tuca, a partner at Mattos Filho law firm specializing in fixed income, noted that over the past decade, capital markets have become a viable financing alternative, helping companies diversify their funding. However, with high interest rates and numerous restructuring cases, the challenge now is how to make renegotiations more fluid. “The difficulty arose because incentivized securities led to a highly fragmented retail investor base,” he explained.
This fragmentation makes it challenging for companies to gather the necessary quorum for debt renegotiation. In some cases, companies were unable to complete renegotiations because they couldn’t meet quorum requirements. Mr. Tuca noted that this issue is being closely monitored by banks that structure these operations, which are seeking solutions. “This is the first time we’re seeing this situation.”
Last year, Light faced difficulties in achieving the required quorum for one of its debt issuances while undergoing bankruptcy proceedings. After failing to gather the debenture holders, the issuance’s fiduciary agent approached the Securities and Exchange Commission of Brazil (CVM) to request a reduction in the quorum requirement, arguing that all avenues, including hiring a digital influencer, had been exhausted to reach investors. The regulator partially approved the request, marking another step in an already complex process.
Douglas Bassi, a partner at restructuring consultancy Virtus, illustrated the challenge by recounting a case last year where he had to contact each debenture holder individually to amend a debt contract clause that required a 90% quorum. The process took nearly nine months. “During that time, we had to work with the company on a temporary solution,” he said.
The regulatory requirements for incentivized securities add another layer of complexity to restructuring processes. Roberto Zarour, a partner at Lefosse law firm responsible for restructuring, pointed out that regulatory rules prevent incentivized securities from being prepaid, complicating situations where companies need to swap out securities during bankruptcy proceedings. This also limits liability management strategies, such as replacing more expensive debt with cheaper alternatives.
Ricardo Prado, a partner at Lefosse specializing in capital markets, noted that banks and companies are actively seeking solutions to make it easier to gather debt holders for necessary approvals. “Often, a company needs to approve a temporary waiver, but economic conditions change year by year,” he said.
Mr. Prado shared a case where a financially healthy company had to hire nine banks just to gather the necessary quorum, incurring additional costs. “This is yet another cost that companies have to bear,” he noted.
This breakthrough discovery that could significantly advance more efficient and sustainable large-scale production of ethanol from agro-industrial waste
02/19/2025
Researchers from the National Center for Research in Energy and Materials (CNPEM), in collaboration with other institutions both in Brazil and abroad, revealed yesterday a breakthrough discovery that could significantly advance the large-scale production of ethanol from agro-industrial waste, such as sugarcane bagasse and corn straw. This form of ethanol, known as second-generation or cellulosic ethanol, has long held promise but faced technical challenges in its production. The findings were published in Nature on Wednesday (12).
The researchers identified a metalloenzyme called CelOCE (Cellulose Oxidative Cleaving Enzyme), which improves cellulose conversion through a previously unknown mechanism. This enzyme addresses one of the sector’s most pressing issues: the breakdown of cellulose biomass, a critical stage in fuel production.
According to a report by Agência Fapesp, the research arm of the São Paulo State Research Support Fund, cellulose is the most abundant plant polymer on Earth but is notoriously resistant to degradation. In nature, its breakdown is slow and requires a complex enzyme system.
With CelOCE, the team has pioneered a new mechanism—oxidative cleavage—that enhances the efficiency of cellulose decomposition. Currently, the efficiency of this process ranges between 60% and 70%, but CelOCE has the potential to increase that yield to 80%. Not only is the process more efficient, but it is also more sustainable, as it requires fewer and less complex enzymes than traditional methods.
“Any improvement in yield is significant, especially when we’re talking about hundreds of millions of tons of waste being converted,” said Mário Murakami, leader of the biocatalysis and synthetic biology research group, in an interview with Agência Fapesp.
The scientists note that CelOCE’s role is not to directly produce the final ethanol product but to assist in the initial breakdown of cellulose. Its action enhances the effectiveness of other enzymes, ultimately improving their ability to convert raw materials into sugars, which can then be used for ethanol production.
The rise of anti-diversity initiatives in the U.S., amplified by Donald Trump’s election, is impacting local subsidiaries’ performance
02/19/2025
On Saturday (8), executive Daniela da Silva Sapin announced her voluntary resignation from Meta via LinkedIn. Ms. Sapin had served as head of public policy for WhatsApp in Brazil for a year and shared in her post that she has spent her career advocating for an open internet, greater transparency, and, more recently, a technology sector that is more responsive to the public interest.
“The recent announcements at Meta, in my opinion, have tipped the balance between my ability to act in favor of these goals from inside vs. outside the company. A corporation aligning itself politically and economically with a powerful, newly elected government is nothing new to anyone. However, the speed and intensity of Meta’s rhetorical turn and the adherence to an ideological base so different from the values that guided my work until then—particularly the integrity and security measures implemented at WhatsApp in recent years—this is simply not something I can understand, let alone support,” she said in her post.
In another part of her message, Ms. Sapin expressed empathy for her colleagues, acknowledging the timing of her resignation: “To the now former colleagues, I know that this announcement comes at a peculiar time, as there will soon be more changes and more departures in the company. I wish you strength and resilience.” When contacted by Valor, the executive stated that her thoughts had been fully conveyed through her post. Meta did not respond to an interview request.
Although Ms. Sapin’s resignation is an isolated case, it may signal broader consequences as companies like Meta, McDonald’s, Walmart, Disney, and Accenture scale back their diversity, equity, and inclusion (DE&I) initiatives. These moves, driven in part by the anti- “woke” sentiment encouraged by U.S. President Donald Trump, could resonate in other markets and provoke pushback from professionals who oppose such shifts.
On Thursday (6), consulting firm Accenture announced it would discontinue its diversity and inclusion targets. Julie Sweet, the company’s CEO, shared a statement with employees outlining the company’s new corporate strategy, which includes three key changes: the elimination of global diversity targets established in 2017 and updated in 2020, the cessation of career development programs for specific demographic groups, and a pause in participation in external diversity benchmarking surveys.
“We will implement the updates outlined above and continue to refine our talent strategy, assessing our policies and practices to ensure they align with our business strategy, remain effective and inclusive, meet the needs of all our employees, comply with applicable global laws, and adapt to the changing landscape,” said Ms. Sweet in her statement. She also emphasized that the corporation would maintain its global equal pay initiatives.
Ms. Sweet’s email raised concerns among Brazilian employees, particularly those from specific demographic groups, such as Black individuals and the LGBTQIA+ community. “People’s first reaction was disappointment because they had always felt safe and welcomed at Accenture. The statement quickly became the talk of the office, and many feared it signaled the end of all diversity policies. The feeling is that the conservative wave in the U.S. could soon reach Brazil,” said one manager, who requested anonymity.
In response to the fallout, Ms. Sweet hosted a live video chat with employees worldwide last Monday (10). During the session, she delivered a brief initial statement and addressed questions. According to the manager, Ms. Sweet clarified that the removal of diversity targets did not imply a diminished commitment to diversity, equity, and inclusion (DE&I), nor would the company stop supporting these groups. “Between the lines, Sweet acknowledged the pressure from the U.S. government and shareholders over potential business impacts if no changes were made. She seemed visibly uncomfortable,” the manager said. As of now, there has been no communication from the leadership in Brazil.
Meanwhile, a week earlier, Google confirmed that it would abandon its diversity hiring targets and was re-evaluating its DE&I programs. The company also removed several commemorative observances—such as LGBT Culture Month, Black History and Indigenous Peoples Month, Holocaust Remembrance Day, Jewish Heritage Day, and Hispanic Heritage Day—from its standard and online calendars.
When contacted by Valor in Brazil, Google reiterated its commitment to fostering a workplace where all employees can thrive and have equal opportunities. The company also noted its role as a supplier to the U.S. government: “As a federal supplier, our teams are reviewing the changes required by recent court rulings and executive orders on this subject [diversity programs].”
In Brazil, there is uncertainty among employees about whether and when the new guidelines adopted by the company in the U.S. will be implemented across its global operations. “The situation is still one of observation; there is little clarity about what will happen in the coming months,” said one manager, who requested anonymity.
In Brazil, Uber has also ceased its involvement with the LGBTQAI+ Business and Rights Forum. This key initiative has been bringing together companies committed to promoting rights and inclusion for the community since 2013. The Forum, which includes more than 160 signatories, including Coca-Cola, Dow, Google, Microsoft, and prominent Brazilian companies like Vale, Natura, Gerdau, and Petrobras, did not disclose the reasons behind Uber’s decision to leave. “We received this news with great disappointment because Uber has always played a crucial role within the Forum,” said Reinaldo Bulgarelli, the Forum’s executive secretary. “It is up to the company to explain why it chose to leave.”
When asked about its departure, Uber explained that the decision is part of an ongoing review of the budget and impact of its local initiatives, a process that is not expected to be completed before the response deadline set by the Forum. The company reiterated its commitment to diversity, equity, and inclusion and emphasized its continued engagement with other initiatives and partners.
Similarly, IBM exited the Forum last year, although the company declined to comment on the matter.
The review of budgets and resources also led to changes at Qualicorp, a health insurance administrator, which dismantled its DE&I management department. According to a source with knowledge of the situation, this restructuring was part of a broader process in which the company reformed policies and implemented layoffs across various departments in an effort to reduce costs.
When contacted, the company stated that no internal actions had been finalized and emphasized that its DE&I program remains a core pillar of its “DNA and culture.” The organization reiterated its commitment to promoting diversity and inclusion, highlighting a workforce predominantly composed of women, including 60% in leadership positions. It also noted that it continues to conduct an annual diversity and inclusion census to “plan more targeted actions fostering a culture of respect for all people.”
Tatiana Iwai, coordinator of Insper’s Center for Business Studies and a professor of leadership behavior, suggests that this moment could serve as a defining test for identifying executives who “truly believe in what they say.” “When the agenda is gaining momentum, it’s easy to join in and say, ‘I support it.’ But when the agenda faces scrutiny, leaders and executives are put to the test,” she explains.
“Those advocating for ethical leadership, aiming to create fair and inclusive teams, now have the opportunity to demonstrate their commitment. This is when they begin to solidify their reputation. It’s time to show that their words align with their actions,” she adds.
However, Ms. Iwai also acknowledges the persistent resistance to DE&I initiatives within organizations. “In times of external polarization, this underlying resistance within companies often becomes more pronounced,” she notes. “It’s likely that many organizations will see the momentum for representation slow down, as the agenda is no longer perceived as an urgent priority.”
Ms. Iwai further observes that even when the DE&I agenda had widespread attention and significant investments, progress in representation was not advancing at the expected pace. “Given that these programs are now under scrutiny, linking investments to tangible outcomes and business results may become essential. This connection, which was unclear before, may now need to be more explicitly emphasized,” she suggests.
Adriana Prates, CEO of Dasein, an executive recruitment consultancy, argues that diversity initiatives have become a competitive advantage, particularly in attracting and retaining talent from younger generations who prioritize inclusive environments aligned with social purpose. “Backpedaling on these actions could alienate qualified professionals who are seeking companies with more diverse and innovative cultures,” she warns.
“On the other hand, factors such as professional development, inspiring leadership, and growth opportunities continue to significantly influence talent retention and attraction,” she says. “The impact will, therefore, depend on how these elements balance with the company’s ability to effectively communicate its values and commitments.”
André Freire, managing partner of the consultancy Exec, argues that companies retracting their DE&I initiatives may face higher turnover. “Professionals from minority groups may feel undervalued or excluded,” he warns. “Companies that fail to invest in diversity risk being perceived as outdated or insensitive.”
Ms. Iwai observes that, until now, organizations have embraced DE&I programs with the genuine intention of creating fairer work environments. However, as some companies begin to roll back these actions, employees will likely question the authenticity of these initiatives. “When these programs are revived in the future, they may be met with greater skepticism, and the effort to reintegrate them will likely be more challenging,” he explains.
Mr. Freire further notes that ending DE&I targets could negatively impact innovation, as diverse teams tend to foster greater creativity. Nevertheless, he believes the decline in diversity initiatives may not be as pronounced as it seems. “It’s striking when large companies widely publicize their pullback from these actions. But I still think the diversity movement is growing because many companies are just now beginning to adopt it,” he says.
“We need to consider the extent of this reduction,” ponders Ms. Iwai. “We’re observing an initial trend, but what’s the speed and scale of this retreat? It’s crucial to determine whether there is a total halt. Not all organizations are completely stopping; some may have scaled back or paused certain initiatives, while others continue.”
Building convergent agenda with Washington’s interests and avoiding war of words in media would be best bet, they say
02/18/2025
Brazil is likely to face greater challenges in renegotiating the impact of tariffs imposed by U.S. President Donald Trump during his second term compared to his first. While it would be helpful to avoid a war of words in the media and especially over politics, which could hinder negotiations, Brazil also could do well by developing a convergent agenda with the new U.S. administration.
This was one of the recommendations from analysts and economists at an event organized by the American Chamber of Commerce for Brazil (Amcham Brazil). They also noted that reducing domestic uncertainty could help mitigate potential external shocks affecting an economy already expected to see modest growth this year.
The first issue at hand is the 25% tariff on Brazilian steel and aluminum. According to Christopher Garman, executive director for the Americas at Eurasia Group, the process to mitigate tariff impacts will resemble 2018’s, albeit more challenging. “Previously, American producers dependent on foreign steel also exerted pressure. Brazil’s task is again to engage with these buyers and highlight the importance of Brazilian products,” he said.
Unlike during his first term, the Republican president is now more convinced that tariffs are the right tool to boost the economy and create jobs in the U.S. Evidence of this includes announcements made without full clearance or planning from his team, such as the 25% tariffs on Mexico and Canada, which were temporarily suspended less than 24 hours later.
“The bottom line is that they were retracted not because they were a mere negotiating bluster, but because they weren’t well-aligned,” argues Mr. Garman, indicating that part of the private sector remains complacent on the issue.
Mr. Garman highlights that the Trump administration is prioritizing renegotiating tariffs with partners in the United States-Mexico-Canada Agreement (USMCA), also known as NAFTA 2.0, delaying any resolution with Brazil.
Another contentious issue is reciprocal tariffs. Former U.S. Ambassador to Brazil Todd Chapman described Brazil as one of the “kings” of tariffs to protect national interests, alongside China. He cited ethanol as an example, where Brazil exports four times more in value terms to the U.S. than the inverse flow.
“Brazil has high tariffs, we have low tariffs. Why should we allow nearly free access to the world’s largest market without reciprocal access?” he summarized.
Bradesco chief economist Fernando Honorato notes that Brazil is somewhat shielded from the U.S.’s focus, given its trade deficits with the U.S. and the relatively insignificant trade flow between the two countries.
“Even an aggressive 25% tariff might reduce exports by $7 million to $10 million, minimally impacting Brazil’s trade balance,” he commented. “Reciprocity poses a risk. I’m more concerned about sector-specific impacts than broader macroeconomic ones.”
This scenario, however, underscores the risks that the lack of stability brings to Brazil’s economic outlook. “Without this anchor, external developments could quickly swing us from side to side, complicating the Central Bank’s task,” added Mr. Honorato.
Ana Paula Vescovi, Santander’s chief economist, warned of potentially indirect impacts from the new American president’s more protectionist stance on the global economy and Brazil, even if all threats aren’t realized.
A more fragmented global economy, combined with mass deportation policies, points to an economy with lower growth potential and higher inflation risk, she indicated. These measures cast doubt on the Federal Reserve’s ability to maintain its interest rate cut cycle.
“These macroeconomic risks and a stronger dollar in the medium term are concerns for the Brazilian economy,” Ms. Vescovi stated, noting that U.S. inflation expectations have been climbing since the end of last year, which could influence the Fed’s policy actions and inflation convergence.
To navigate these risks, Mr. Chapman advocated for greater private sector involvement in government negotiations. “International relations are too important to be left solely to government officials,” he affirmed.
He suggested considering investments in the U.S. as a strategy, citing companies like Gerdau and JBS, which already operate in the country.
Mr. Garman echoed this sentiment. “It won’t be easy, so there’s all the more reason to engage aggressively and highlight Brazil’s alignment with American interests,” he said. “Brazil is a critical supplier of minerals for the defense industry. The U.S. is also focused on energy security and reducing dependency on China in key supply chains. Brazil plays important roles in these areas.”
Widespread revision reflects worsening economic outlook with potentially higher inflation and interest rates slowing down borrowing in 2025 and 2026
02/18/2025
Brazilian banks have revised lending growth forecasts for this year to 9% from 8.5%, according to the Banking Economy and Expectations Survey by business federation Febraban. Among the major lenders that have already released their balance sheets, growth projections for their portfolios are even lower, around 6.5%.
According to Febraban’s survey, the portfolio of loans from non-directed funding is expected to expand by 8.1% this year (down from 8.3% in the previous survey), and the directed portfolio by 9% (down from 9.7%). When broken down by borrower type, business lending is expected to grow 7.1% (down from 7.8%), while consumer credit is expected to rise by 8.6% (down from 9.1%).
The downward revision of industry expectations was widespread, reflecting a consolidation of economic expectations for the year. “This revision was already anticipated and has been shaping up since the last quarter of 2024. The result reflects a worsening economic scenario, with expectations of higher inflation and, consequently, higher interest rates throughout the year,” stated Rubens Sardenberg, director of economics, prudential regulation, and risk at Febraban, in a press release.
The survey also collected the first projections for credit growth in 2026. The average forecast indicates a continuing slowdown in lending growth, with an anticipated expansion of 7.7% next year.
Meanwhile, there was a slight improvement in the projection for the default rate of the non-directed portfolio this year, which dropped from 4.7% to 4.6%, although it remains above the level observed at the end of 2024 (4.1%). This result can be attributed to increased caution in credit provision, which may reduce the expansion of defaults over the year.
The survey shows that a significant majority of respondents (76.2%) expect the Selic rate to rise beyond 14.25% per year in 2025, and that the cycle of cuts will not begin this year. For comparison, in last December’s survey, only 47.4% selected this option, showcasing a less optimistic view of the scenario since then.
In this context, expectations for interest rates have risen compared to the previous survey. Now, the median projection for the Selic rate is 15.25% per year by June 2025, remaining at this level at least until September.
Conversely, the projection for the exchange rate at the end of the year has improved, dropping to R$5.95 from R$6.00 previously. Regarding inflation, just under half (47.6%) of lenders believe it will be close to 5.5% (the current market consensus). However, one-third of analysts surveyed now expect inflation to be close to (or above) 6% this year.
Regarding economic activity, a little over half (52.4%) of the participants continue to project GDP growth of around 2.0% in 2025, similar to the previous survey (50% of respondents).
Retailers report sluggish sales as suppliers inquire about price increases of up to 7%
02/18/2025
Consumer spending showed signs of instability at the start of 2025, a stark contrast to the steady growth seen in the same period last year. Weekly monitoring by NielsenIQ (NIQ), obtained by Valor, indicates that February began with a slowdown in purchasing activity compared to January, shifting from strong sales volumes to a deceleration relative to 2024.
This trend did not occur a year ago when sales expanded week by week between January and February 2024.
From early January to February 9, sales volumes increased by 4.8% compared to the same period in 2024, based on NIQ’s weekly data analyzed by Valor Data. As of February 2, the cumulative growth was 5.2%. However, this increase was largely driven by the traditionally strong start of January, which tends to push the overall average higher.
Typically, the first week of the year sees a surge in sales due to consumers restocking household essentials after the holiday season. However, in 2025, sales momentum declined rapidly week by week compared to 2024, with volumes dropping for the first time between January 27 and February 2, registering a growth rate of just 2.3%.
The data is unaffected by the timing of Carnival in 2024, which took place after February 10 last year. NIQ noted that holiday-driven sales only began influencing the retail sector after February 5, according to last year’s report.
NIQ provides this data weekly to its clients, serving as a benchmark for companies to compare their performance with the broader market. Large retail groups primarily use the reports to track demand trends.
Sluggish demand
The consumption slowdown coincides with another wave of price increases from manufacturers to retailers, adding inflationary pressure on food and beverages that could further impact demand.
A large supermarket chain and a leading cash-and-carry wholesaler reported on February 14 that suppliers of essential grocery items are inquiring about price adjustments ranging from 5% to 7%. Items that had not previously been targeted for price hikes, such as eggs and potatoes, are now on the list.
“The dollar remains high despite recent declines, agribusinesses are prioritizing exports, and fulfilling 100% of purchase orders has become more difficult due to increased export volumes—these factors are all driving up prices,” said the CEO of one of these retail chains. “We are already selling eggs at over R$1 each. A year ago, a carton of ten eggs cost R$10; today, it’s R$15, and further price hikes are expected,” he added.
A separate report obtained by Valor from Scanntech Brasil, a data and research firm, noted that the average price level in January was the second highest in the past 13 months.
“January’s price levels were surpassed only by December 2024, when seasonal factors naturally drive prices higher,” the company said in its report.
Regional disparities
NIQ’s data indicates that Brazil’s Northeast region and Greater São Paulo (including the capital) are experiencing the weakest sales growth in 2025, lagging behind the national average in both supermarkets and cash-and-carry wholesalers.
These areas represent significant consumer markets, accounting for 22% of the country’s population in 2024, according to the Institute for Applied Economic Research (IPEA). Their sales performance has gained attention in recent weeks amid projections of economic deceleration and a sharp drop in President Lula’s approval rating, according to a recent Datafolha survey.
In the Northeast—a key region in Mr. Lula’s 2022 election victory—sales at hypermarkets declined by 3% in value terms (without adjusting for inflation) as of February 2, marking the worst regional performance. Volume data for this segment was not disclosed.
In large supermarkets (1,000 to 2,500 square meters), revenues in the Northeast grew by 5%, the smallest increase among all regions despite the uptick. Meanwhile, cash-and-carry sales in the region rose 12%, slightly below the national average of 13%.
Rising food prices, alongside structural economic challenges, have been cited by research firms as key factors in Mr. Lula’s record-high disapproval ratings.
Nationwide, small supermarkets have felt the slowdown the most since early January, while cash-and-carry stores have shown greater resilience.
Small supermarkets, often run by local entrepreneurs and family businesses, started the year with a 21% increase in sales compared to the same period in 2024. However, by early February, growth had slowed to just 1.4%.
Sales volatility
Valor found that the Brazilian Supermarket Association (ABRAS), the country’s largest food retail organization, has preliminary data for the week of February 3–9. The figures show a 2.8% increase in sales volume compared to 2024, following the decline posted in the previous week. According to the association, this reinforces the perception of an unstable consumption pattern in early 2025.
This data should be viewed in context: the comparison period—February 5–11, 2024—overlapped with Carnival, when sales surged 13.5%.
“We need to wait a few more weeks to assess the consistency of these peaks and valleys in consumption at the start of the year,” said João Galassi, president of ABRAS, when asked about February’s sales figures.
Mr. Galassi noted that while the recent interest rate hikes affect the broader market, they have a more pronounced impact on electronics, which rely on consumer credit. If demand for durable goods declines, more disposable income could become available for food and beverage purchases.
Despite waiting for more data, ABRAS announced at the end of January that it expects supermarket sales to grow by 2.7% in 2025—lower than the 3.7% increase in 2024. If this forecast holds, 2025 will mark the weakest sales performance for the sector since 2018 when sales rose just 2%. These figures are adjusted for inflation and reflect changes in sales volume.
This projection aligns with broader retail forecasts for 2025, which anticipate growth of 1.7% to 2% on average, compared to a 4.7% increase in volume in 2024.
Economic uncertainty
Eduardo Terra, managing partner at BTR Consultoria and a board member at several retail chains, noted that 2024 was a strong year for the sector, but companies remain cautious in their 2025 budgets. According to the Brazilian Institute of Geography and Statistics (IBGE), the retail sector grew by 4.7% in volume last year, the highest since 2012, but investment plans remain conservative.
“Since the Selic rate hike in 2021, companies have focused on improving productivity, renegotiating debt, and cutting costs. These priorities remain crucial, especially with interest rates rising again, particularly for more indebted retail chains,” Mr. Terra said.
A report sent to clients on Monday (17) by BTG Pactual’s analysis team highlighted that with weaker sales expected in 2025 compared to 2024, retailers will prioritize protecting profit margins rather than pursuing aggressive growth. Strategies to optimize working capital could lead to improved financial returns.
This cautious approach has been widespread in retail since 2021 when the COVID-19 crisis, rising inflation, and subsequent monetary tightening pushed companies to focus on margin preservation rather than sales expansion.
Focus shifts from UN reforms to preserving multilateral system, diplomats say publicly and privately
02/17/2025
The isolationist stance promoted by U.S. President Donald Trump and his robust actions against the multilateral foreign relations are pushing Brazil to rethink its foreign policy strategy. Officials in Brasília state that the focus on reforming multilateral organizations to give emerging nations a stronger voice is gradually shifting towards ensuring the survival of the post-World War II and post-Cold War systems.
For instance, Brazil’s longstanding ambition to expand the United Nations Security Council seems more distant now. However, Brazil still has an interest in minimizing any weakening of the council. Similar concerns apply to the World Health Organization (WHO), the International Criminal Court (ICC), and climate negotiations.
In a speech earlier this month at the Getulio Vargas Foundation (FGV), Foreign Minister Mauro Vieira voiced these concerns. “Growing global inequalities elicit various reactions in the current phase. They give rise, on one hand, to the cause of world order reform, which Brazil has long advocated. But they also give rise to temptations to dismantle the order, often in the very centers where it was conceived and from which they benefited the most,” he stated. “Recent reports on trade—marked by a slew of protectionist measures and unilateral intimidation through tariffs—highlight this trend,” noted the minister.
While UN reform remains central to Brazil, a high-ranking diplomat points out that “the primary concern now is to prevent the system from collapsing.” Previously, it was about reforming to improve the system; now, it’s about ensuring its survival.
The current tumultuous context, featuring Mr. Trump, an armed conflict between Russia and Ukraine, and the global rivalry between China and the U.S., creates other “emergencies,” according to sources from the Presidential Palace and Itamaraty, as the Brazilian foreign service establishment is known. One such emergency is the climate issue. With the U.S. withdrawing from the Paris Agreement—another Trump action—Brazil is striving to prevent any fallout that could jeopardize even the COP30 summit scheduled for Belém in November.
Another pressing issue is the multilateral trade system, already ailing from the years-long weakening of the World Trade Organization (WTO). From the perspective of Brazilian diplomacy, while this system is currently malfunctioning, its complete collapse—with nations retaliating against US unilateral measures—would be even worse.
Brazil will utilize platforms such as the BRICS group of nations and the G20 to reinforce multilateralism and counter Trump’s influence. With the BRICS, Brazil aims to use the July summit in Rio to drive COP30-related agendas and foster cooperation among member countries.
Itamaraty is working to ensure that a “condemnation of unilateralism” is included in the final text of the BRICS summit, although direct references to the US are unlikely. Furthermore, Brazil is negotiating an internal BRICS pact for a “commerce truce.” According to a source involved in these discussions, this would be “a sort of gentlemen’s agreement where these countries also refrain from taking unilateral measures against each other.”
Itamaraty will also seek to convince other nations so that the group of emerging countries brings a unified climate financing proposal of $1.3 trillion to Belém in November. Brazil also wants its partners to promptly submit their Nationally Determined Contributions (NDCs), commitments each country makes under the Paris Agreement. The deadline expired on the 10th, with only 13 of the 195 signatories having sent their commitments.
Sources in Brasília note that the strategy towards Mr. Trump’s US could be temporary, considering his four-year term and that he cannot be re-elected. They also believe that protectionist measures may negatively impact employment and inflation, sparking domestic resistance.
Consequently, he may backtrack on measures like the recent tariffs on Brazilian steel and ethanol. However, Mr. Trump’s inclination to negotiate bilaterally with each partner and undermine the multilateral system is not expected to change.
Top mining industry official says supply of critical minerals set to keep steady while usage in U.S. likely to shift to defense sector
02/17/2025
Critical and strategic minerals mined in Brazil are among the key inputs for achieving energy transition goals. Brazilian natural resources like copper, lithium, graphite, nickel, and rare-earth elements are poised for increased production through enhanced geological knowledge, mineral surveying, and new mining concessions, according to Brazil’s Ministry of Mines and Energy (MME).
Some of these critical and strategic minerals are sold to the U.S., and with Donald Trump’s return to the country’s leadership, the market raised concerns about potential reductions in these imports or additional tariffs. However, Raul Jungmann, president of the Brazilian Mining Institute (Ibram), asserts that Brazil will continue exporting critical and strategic minerals to the U.S. The difference is how they will be used.
Mr. Jungmann notes that out of the 51 strategic minerals consumed by the US, at least 15 can be exported by Brazil. “There is a global rush for minerals, especially strategic ones. Regarding Mr. Trump, the early indications are that there is still interest, but now the reason behind this interest is shifting.”
During Mr. Trump’s previous administration, the critical and strategic minerals purchased by the US were aimed at applications related to energy transition. Now, according to Mr. Jungmann, these products will be directed toward the defense sector. For instance, lithium from Minas Gerais is a vital component of rechargeable batteries, while nickel from Goiás, Bahia, and Piauí is used in stainless steel production. According to consolidated data from the MME, Brazil ranked as the world’s fifth-largest lithium producer in 2022, following Australia, Chile, China, and Argentina. For nickel, Brazil was the ninth-largest producer that year.
A Citibank report indicates that Brazil is well-positioned to attract investments and scale the production of critical minerals. “This could bring economic benefits to Brazil and Latin American countries through mineral supply, job creation, and infrastructure development.”
“Brazil possesses approximately 20% of the global reserves of graphite, nickel, manganese, and rare earth elements. However, production does not match the reserves, accounting for just 0.2% and 7% of the global production of rare earth elements and graphite, respectively. Only 7% of the global exploration budget for nickel and rare-earth elements is allocated to the Latin American region,” according to the bank.
Productivity gains and increased supply drive price adjustments, with exports playing a balancing role
02/17/2025
After being one of the main drivers of inflation in 2024, beef prices in Brazil are showing signs of decline, a trend expected to continue throughout the year’s first half. Productivity gains and increased female cattle slaughter are key factors behind this movement, even as the livestock cycle shifts toward lower supply. Additionally, the opening of new export markets for Brazilian beef could help stabilize domestic prices.
The price of live cattle, which surpassed R$350 per arroba (15 kg) in São Paulo last November, has since dropped to around R$320, while beef cuts are also becoming more affordable. In the Greater São Paulo wholesale market, the price of the very popular picanha—similar to the top sirloin cap—fell by 8.28% over 30 days (as of January 13), according to Scot Consultoria. Alcatra (rump steak) and maminha (rump skirt) declined by 4.26%, and contrafilé (striploin) dropped by 3.97%.
The Brazilian Beef Exporters Association (ABIEC) forecasts a 10% increase in beef exports in 2025, reaching nearly 3.3 million tonnes. Negotiations with key markets such as Vietnam, Japan, Turkey, and South Korea could fuel this growth.
However, ABIEC does not expect the rise in exports to reduce domestic supply. Speaking to Valor, the association’s president, Roberto Perosa, said that while cattle availability will adjust throughout the year due to the livestock cycle shift, the supply to slaughterhouses and both domestic and international consumers will remain steady.
Mr. Perosa attributes this stability to a record grain harvest, which is expected to improve conditions for cattle finishing and feedlot operations, ultimately increasing carcass yields and maintaining overall beef production levels. “We will see productivity gains alongside a reduction in raw material costs,” he said.
Beyond productivity gains, Mr. Perosa said that most beef cuts exported by Brazilian meatpackers—such as front cuts and offal (including tongue, heart, tripe, and intestines)—are not widely consumed in Brazil. This means exports do not significantly compete with domestic beef supplies.
“Exports play a key role in stabilizing cattle prices in Brazil. Selling these products to Asia, where they fetch higher prices, reduces pressure on the cost of cuts consumed locally, such as filé mignon (tenderloin) and picanha (sirloin cap),” Mr. Perosa noted. “The more we export, the better the cost structure for meatpackers. That’s why opening new markets is crucial. Exports determine whether a meatpacker operates at a profit or a loss,” he added.
According to Leonardo Alencar, head of agribusiness, food, and beverages at XP, the increased culling of non-pregnant female cattle at this time of year is also expected to boost supply and keep prices under control throughout the first half of 2025.
“The question is how production and slaughter metrics will play out over the year. While slaughter numbers are expected to decline, the average weight per animal is likely to increase,” Mr. Alencar noted.
Maurício Palma Nogueira, executive director at consultancy Athenagro, challenges the expectation of supply restrictions in 2025 and also highlighted productivity improvements. “The cattle herd is getting younger, we are increasing efficiency, and turnover is accelerating. This allows for more female cattle to be sent to market without compromising herd size,” he said.
This will be the first livestock cycle shift since Brazilian beef entered the Chinese market, and Mr. Nogueira believes this could lead to different dynamics than seen in previous years. “It appears that the cattle industry is now capable of responding more quickly, which could limit major price spikes for consumers,” he said.
“As we look ahead, beef production is likely to adjust faster compared to previous cycle shifts,” he added.
Mr. Nogueira expects some fluctuations in cattle prices and beef retail prices but at a more moderate pace than in 2024. While there could be some price adjustments after the rainy season, stability is expected by the end of the year.
Mr. Perosa, from ABIEC, also anticipates more balanced beef prices in the domestic market but acknowledges that achieving a 10% export growth target “is feasible but challenging.” Even if negotiations for new markets do not materialize as planned, exports could still rise through increased sales to Chile and Mexico, as well as stronger trade with the Middle East. There is particular optimism regarding Vietnam and Japan, both of which President Lula is set to visit in the coming weeks—following a recent visit by Mr. Perosa himself.
Cesar de Castro Alves, head of agribusiness consulting at Itaú BBA, estimates that beef exports could grow between 2% and 5% in 2025, with additional upside potential if new markets open.
Mr. Alencar, however, is skeptical about reaching a 10% export increase, even with expected productivity gains in Brazil’s beef industry.
In 2024, Brazil set a new export record, shipping 2.87 million tonnes of beef—equivalent to 32% of total production.
For the U.S. market, the second-largest buyer after China, Brazil had already exhausted its 65,000-tonne duty-free beef quota—shared with nine other countries—by January 15, underscoring strong demand.
Despite this, Oswaldo Ribeiro Júnior, president of the Mato Grosso Cattle Ranchers Association (ACRIMAT), reassured that both domestic and international markets will remain well-supplied. “There will be no shortage of beef for either market,” he said.
*By Rafael Walendorff e Nayara Figueiredo, Globo Rural — Brasília and São Paulo
Gabriel Galípolo sees country in “elevated level” from the perspective of monetary tightening
02/12/2025
Central Bank President Gabriel Galípolo said that “we are moving towards a quite elevated level from the perspective of monetary tightening.” Mr. Galípolo participated in an event on Wednesday morning organized by the Brazilian Center for International Relations (Cebri), the Institute of Economic Policy Studies/Casa das Garças, and the Center for Public Policy Debates (CDPP).
The central banker, who took over Brazil’s monetary authority earlier this year, explained that “it’s logical” that Brazil will navigate a short-term “uncomfortable” period for society, businesses, and families, “a time when inflation should remain at an uncomfortable level, outside the target, reflecting all past events, and you expect monetary policy to gradually take effect and present a deceleration process.”
Mr. Galípolo said that within the Central Bank’s baseline scenario, what is set is “an absolutely traditional expectation of what is expected from the transmission mechanisms of monetary policy. In other words, from that point, you begin to witness a deceleration process.”
The COPOM raised the Selic policy rate to 13.25% per annum from 12.25% at the last meeting, in January. The committee also maintained the signal of a 100-basis-point hike for the March meeting.
