Showing posts with label Tarcisio Freitas. Show all posts
Showing posts with label Tarcisio Freitas. Show all posts

Tuesday, 1 September 2026

The Economist Praises Renan Santos, and Ignores His Authoritarian Rhetoric

British magazine The Economist, regarded by many as a sort of bible of modern-day liberal thought, published a piece in which it shows itself to be extremely tolerant of an openly fascist candidate in the Brazilian election.

Renan Santos, praised by the magazine, advocates "dyeing the ground red with the blood of these scumbags" when discussing the fight against crime. One of the slogans of his political party, Missão, is "arrested, killed."

The magazine mistakenly portrays Santos as "outsider" with a "bold vision" and a "proposal full of new ideas" for the country — and that’s not to mention that this so-called "outsider" identified by The Economist has been involved in Brazilian politics for over a decade.

In fact, it is the opposite. Renan Santos is more of the same. From Paulo Maluf to him, the Brazilian right has championed a model based on police brutality and economic liberalism. There have been countless administrations like this, yet the country has made no progress. In many cases, things have actually gotten worse —as seen today with the administration of Bolsonarista Tarcísio de Freitas in the state of São Paulo, or that of fellow Bolsonarista Cláudio Castro in Rio de Janeiro (who was removed from office and is the target of multiple Federal Police investigations and operations over suspected corruption).

Renan Santos came from the Free Brazil Movement, the MBL. The magazine does not indicated that Santos and his movement have promoted ideas that clash with Brazil’s Constitution. In its Article 5, the Brazilian Constitution states that "Brazilian citizens are equal before the law".

Santos has said that if he wins, he plans to follow what dictator Nayib Bukele did in El Salvador. Critics classify this base-oriented, crude, and uncompromising style of violent populism as politics. They also link it to support for police abuse. In Brazil, this line shows up often on the right. It has appeared in the campaign talk of several contenders. Zema, Caiado, and Renan Santos all pointed to Bukele’s security approach.

But in a recent interview on Estúdio i, a major political show in Brazil, led by Andrea Sadi, contradictions came to light. The discussion also raised worries about how backing Bukele could hurt democracy in Brazil.

If these figures try to copy Bukele’s plan here, they would need to ignore the rule of law. That would weaken democratic life in Brazil.

Therefore, the British magazine piece is troubling for one main reason: a large share of the press has been handling Renan Santos as if he were a regular, mainstream political figure. He is not.

The core issue is simple. Giving him this kind of visibility helps someone linked to a cause that speaks openly about the unrestricted and illegal use of police violence as a political tool. He has also called for the police to kill even more people. That matters because Brazil’s police already have one of the worst records for deaths worldwide. When this is treated as normal content, it says a lot about how parts of the mainstream media work, and about the kind of “economic liberal” thinking they lean on.

What makes it worse is that this line of defense does not even deliver results. It does not bring safer streets. If higher police lethality meant less danger, Brazil would not be seeing the terrible numbers it has today. Instead, the country ranks among the top places where people fear violence in their daily lives.

For many in the liberal media, it looks like almost any form of rule can pass, even a  dictatorship, as long as it matches their preferred economic script.

Monday, 8 December 2025

Political Shockwaves: How Brazil's 2026 Election Uncertainty Sent the Ibovespa Plunging and Hiked Selic Rate Forecasts

Brazilian financial markets experienced one of their most turbulent sessions in recent history last Friday, as political developments in Brasília reignited deep-seated concerns over fiscal policy, monetary strategy, and long-term economic planning. The market's reaction was swift and severe: the benchmark Ibovespa index suffered a dramatic drop — after a series of record highs, the Ibovespa B3 experienced a drop of more than 4% —, while the Central Bank's latest Focus Report reflected this new wave of instability by signaling higher expectations for the Selic rate in 2026. This shift underscores how political uncertainty in Brazil directly translates into heightened risk premiums and a more restrictive monetary outlook.

Political Volatility Reshapes Monetary Outlook

For weeks, the financial community had been anticipating a potential easing cycle in Brazil's monetary policy, hoping for lower interest rates ahead. However, Friday’s political shock abruptly reshaped these expectations.

The catalyst was the early, and later confirmed, report that Flávio Bolsonaro would be the chosen presidential candidate for the 2026 election. This news immediately fueled investor anxiety regarding economic unpredictability, particularly concerning fiscal management in a potential 2027 administration led by the candidate.

The weekly Focus Report, compiled from projections by over 100 financial institutions, now signals a reversal of the recent downward trend in interest rate forecasts. A month prior, the market projected the Selic rate to end 2026 at 12.25%. Following the political sell-off, projections have jumped, reflecting the market's need to price in additional risk.

The Ibovespa's Steepest Decline Since 2021

The Ibovespa had been on a record-setting streak, briefly touching 165,000 points early in the session. The news of the potential Bolsonaro-aligned candidacy triggered a swift and severe reversal, resulting in one of the index's sharpest single-day drops since 2021.

The index plunged from nearly 165,000 points to 154,000 points. This massive sell-off was driven by fears that a politically motivated administration could undermine fiscal predictability, especially when compared to expectations surrounding other potential contenders, such as São Paulo governor Tarcísio de Freitas, who is widely viewed by markets as a more technocratic and fiscally disciplined option — in fact, Tarcísio de Freitas is even more radical than Bolsonaro when it comes to the economy. In São Paulo, the government even privatized the water supplier company (Sabesp). The governor also established a public security policy marked by dozens of cases of police brutality. There were cases where police officers threw a citizen off a bridge and also a police operation in Guarujá, in the Baixada Santista region, where 38 people from a poor community were killed by the police. On that occasion, Tarcísio said he was "extremely satisfied" with the police action.

Analysts highlight that the connection between political risk and monetary policy is direct: political uncertainty and a lack of clarity on economic plans increase the country's risk premium. The Central Bank, in turn, tracks these risks closely, as political turbulence affects asset pricing, the currency, and overall investor confidence. Consequently, expectations of unstable fiscal policy push long-term interest rates higher, forcing the market to price in a higher Selic rate to compensate for the added risk.

Focus Report Quantifies Risk: Higher Selic in 2025

The latest Focus Report, released this week, provides a clear quantification of the market's revised expectations. While inflation and GDP growth forecasts remain relatively stable, the outlook for the Selic rate has been revised upwards for 2025.

Metric

2024/Forecast

2025/Forecast

Inflation (IPCA)

4.40%

4.16%

GDP Growth

2.25%

1.80%

Exchange Rate (BRL/USD)

5.40

5.50

Selic Rate

N/A

12.25% (Revised Up)

Source: Central Bank Focus Report, December 2025

The upward revision of the Selic rate for 2025 (from 12.00% to 12.25%) confirms that the market is now less certain about the speed and depth of the current interest-rate cutting cycle. Analysts broadly expect rate cuts to resume in 2025, but the political noise has pushed the anticipated start date from January to March.

Structural Hurdles: Why Brazil's Interest Rates Remain High

The recent volatility has forcefully resurfaced the broader debate over Brazil's structural economic challenges. Despite a global trend toward lower policy rates, Brazil remains burdened by high structural rates due to several persistent factors:
  1. Low Productivity and Supply Constraints: The country's economic structure lacks dynamism and struggles to adjust supply to rising demand, making it highly susceptible to inflationary pressures.
  2. Tight Inflation Target: The inflation target was arbitrarily lowered during the Temer administration (from 4% with a 2-point band to 3% with a 1.5-point band) without corresponding structural improvements in the economy.
  3. Aggressive Monetary Response: A tighter inflation target necessitates a more aggressive interest-rate response from the Central Bank, even when inflation is driven by supply-side issues rather than excess demand.
In essence, Brazil's combination of low productivity, deindustrialization, and a narrow inflation band all contribute to keeping interest rates stubbornly high, making the economy highly sensitive to political risk.

Navigating the Political-Economic Crossroads

The immediate future holds a high-stakes "Super Wednesday" with key decisions from both the U.S. Federal Reserve (Fed) and Brazil's Monetary Policy Committee (COPOM). The Fed is widely expected to cut rates, which would ease pressure on emerging markets. While COPOM is not expected to signal immediate cuts, analysts will scrutinize its tone for any subtle shift that might leave the door open for reductions later in 2025.

While Friday’s drop may have been an overreaction, early trading this week showed a partial recovery, with long-term yields dropping and the Ibovespa attempting a rebound. Nevertheless, markets will remain in a holding pattern, highly sensitive to both the COPOM decision and any further developments in the volatile political landscape ahead of the 2026 elections.

Thursday, 14 November 2019

Economy Minister Paulo Guedes says Brazil and China are negotiating the creation of a free trade area

Brazil and China have begun negotiations, according to Economy Minister Paulo Guedes, about the possibility of establishing a free trade area between the two countries.

The Brazilian minister said the negotiations are at an early stage. However, under the rules of Mercosur, a group of which Brazil is part, member countries of this bloc cannot individually enter into bilateral agreements involving tariff elimination.

For Guedes, these negotiations are to make Brazil "integrate into global chains".

Paradoxically, President Jair Bolsonaro, who was a harsh critic of China during the 2018 campaign, now seems very keen to get closer to the communist nation. After meeting in Brasilia with Chinese leader Xi Jinping, Bolsonaro said the Asian giant "is part of Brazil's future."

This week, the governments of Brazil and China sign nine acts of cooperation. Both advocate a closer approach between the two nations in technology. Brazil will export agribusiness expertise to the Chinese, while China, according to the Brazilian Infrastructure minister Tarcisio de Freitas, may take part in auctions for two railroads in Brazil.