Brazil Ends 2025 With Stronger-Than-Expected Economy: Falling Inflation, Industrial Resilience, and Historic Job Market Gains

As 2025 comes to an end, Brazil’s economic performance defies nearly all pessimistic forecasts made at the start of the year. In her latest column for O Globo, journalist Miriam Leitão highlights a surprising mix of falling inflation, a stronger currency, and record labor-market results. New data from industrial production and real estate activity reinforce a picture of resilience, even amid some of the world’s highest interest rates.

Below is a comprehensive overview of the key indicators shaping Brazil’s economic outlook.

Inflation Cools and Food Prices Plunge, Boosting Household Income

At the beginning of 2025, economists predicted a 6% inflation rate. Instead, inflation is closing the year at 4.4%, within the Central Bank’s target band, and may fall even lower.

The real standout is food inflation. Forecasts suggested an increase of 8–9%, yet food inflation is ending the year at just 1.35%, thanks to several consecutive months of declines. This dramatic drop boosted household purchasing power, especially for lower-income families, whose budgets are heavily impacted by food costs.

Brazilian Real Strengthens: Dollar Falls Far Below Expectations

Another major surprise was the exchange rate. Economists warned that the dollar could reach R$ 7.00 in 2025. Instead, the currency reversed course, falling from R$ 6.18 at the start of the year to around R$ 5.35 by year-end, with continued downward pressure.

GDP Avoids Recession Despite Real Interest Rates Near 10%

High interest rates usually push economies into contraction, but Brazil proved more resilient.

The GDP result for Q3, to be released this week, should show slight positive growth of 0.2%, avoiding the recession widely predicted earlier this year. Brazil now appears on track to close 2025 with around 2% GDP growth, far above initial projections.

Industrial Production: Resilience Despite High Interest Rates

Newly released data from Brazil’s industrial sector show a nuanced but encouraging picture.

Overall Industrial Output Rises 1% in October

Industrial production increased 1% in October, driven predominantly by the extractive industry, which surged 3.6% year over year, thanks largely to strong oil output.

Machinery, Equipment, and Durable Goods Show Strength

Segments such as machinery, equipment, and durable goods posted gains, highlighting ongoing pockets of industrial demand even under tight monetary policy.

Manufacturing Declines Slightly but Avoids Collapse

The “true” manufacturing segment — manufatura estrito senso — slipped 0.6% month-over-month. However:

• If refinery activity is excluded, the result improves noticeably.

• Out of 25 industrial sectors, 12 posted growth in October.

This reinforces a key takeaway: Brazil’s industry is not collapsing, despite heavy pressure from a 15% policy interest rate.

FIESP Outlook: Slower Growth, but Still Positive in Key Areas

According to FIESP:

• Overall industrial production is expected to grow 0.9% in 2025, down from 3.1% in 2024.

• Manufacturing output should end 2025 near 0%, with a slight contraction of 0.9% projected for 2026.

Even with these slowdowns, the word of the year is resilience.

Real Estate Market Surges: São Paulo Sees Record Activity

One of the most surprising indicators comes from the real estate sector.

Launches Jump 88% Year-Over-Year in São Paulo

According to Secovi, real estate launches in the city of São Paulo rose an astonishing 88% compared to the previous year.

Sales Increase 8% in October

Property sales in October rose 8% year-over-year, demonstrating strong demand despite high borrowing costs.

This booming activity signals not only confidence in long-term economic prospects but also the impact of falling long-term interest rates.

Long-Term Interest Rates Fall Sharply, Boosting Investment Outlook

While Brazil’s short-term rates remain high, the long end of the yield curve is falling significantly — a critical signal for future growth.

• The 2035 NTNF dropped from 15% to 13% in one year (a 200 bps decline).

• This corresponds to over 20% capital gains for investors in long-term fixed-income assets.

• The entire long-term curve is approaching or dipping below 13%.

This drop supports investment in infrastructure, real estate, and long-horizon business projects.

Unemployment Reaches Lowest Level in History

The labor market remains one of Brazil’s most impressive success stories in 2025.

• The unemployment rate fell to 5.4%, the lowest in the historical series.

• Economists are struggling to understand how job creation remains so strong despite tight monetary policy.

Some analysts highlight:

• A portion of workers left the labor force but not due to discouragement.

• Many left work because household income improved enough to allow someone to study or retrain full-time.

Why Interest Rates Still Haven't Fallen

Despite improving inflation, the Central Bank argues that rates cannot be cut yet because inflation remains above the 3% target, even if moving steadily toward it.

Economists are split:

• Some believe rate cuts will begin January 2026.

• Others expect cuts only in March or April.

The consensus: 2026 will be a year of gradual, cautious rate reductions.

A Year That Ends Much Better Than It Began

Brazil closes 2025 with a far more positive economic landscape than expected:

• Inflation is falling

• Food prices dropped dramatically

• The dollar strengthened

• Industrial production shows resilience

• Real estate surged

• Long-term interest rates fell sharply

• Unemployment hit historic lows

• GDP avoided recession

In short, 2025 ends much better than economists predicted, and much better than it started.

Fiscal Populism, Productivity Crisis, and the Role of Education in Brazil’s Economic Stability

Brazil is currently facing a striking disconnect: while financial markets soar and the economy operates at near full employment, many orthodox economists continue to warn of an imminent fiscal collapse. Stock indices reach historic highs, inflation remains under control, and investors expect a new cycle of interest rate cuts. Yet these same experts — who have been consistently wrong in recent years — insist the country is heading toward a structural crisis.

But how much truth is there behind these warnings?

Beneath the market euphoria lie familiar weaknesses: low productivity, a political system resistant to long-term reforms, and rising public debt. Global capital fleeing U.S. volatility has inflated Brazilian asset prices, creating a temporary sense of strength. Meanwhile, industrial policies, subsidies, and local-content requirements echo past cycles that ended in crisis.

Paradoxically, Brazil is also experiencing a historic boom in infrastructure investment — R$ 760 billion this year alone. The country is not on the verge of collapse, but it is also far from entering a sustained virtuous cycle. To move forward, Brazil must confront deeper structural challenges.

Is Brazil’s Fiscal Deterioration a Threat to Long-Term Growth?

Orthodox economists argue that Brazil’s new fiscal framework is failing despite record investments. They warn that debt could exceed 84% of GDP, interest expenses are rising, and the primary result is sliding back into deficit. To stabilize debt, they claim Brazil would need an adjustment of over 5% of GDP — politically unfeasible under current conditions.

In public debate, social investments are often labeled “wasteful spending.” Specialists in fiscal policy argue the problem is not the size of public spending but its inefficiency. Waste, corruption, and poorly designed programs damage credibility, but strategic public investment in essential sectors is crucial for development. The challenge is separating unproductive expenditures from those that generate long-term growth.

Economists with a developmentalist outlook add another perspective: should a country be forbidden from spending more than it collects? While orthodox thinking says deficits increase risk and raise interest rates, empirical data suggests otherwise. Research by economist Demian Fiocca, for example, shows that Brazil’s real interest rates were higher during years of primary surplus than during fiscal deficits — contradicting the popular belief that austerity improves creditworthiness.

A broader argument emerges: global powers like the U.S. and China have consistently run deficits to finance innovation, industrial capacity, and technological leadership, while promoting austerity for developing economies. Strategic deficits — similar to early-stage investment in startups — can boost innovation and productivity if guided by coherent national planning. Embraer and Embrapa stand as clear examples of successful, state-driven long-term strategy.

Brazil’s Productivity Crisis: The Biggest Threat to Economic Stability

Beyond fiscal debates, Brazil’s real long-term challenge is its chronic productivity stagnation. Investments in research, innovation, education, and infrastructure remain insufficient. Analysts highlight the absence of a national strategy for technology, logistics, scientific development, or workforce training.

Without human capital development, Brazil’s potential growth will continue to shrink.

While financial markets celebrate temporary highs, the nation’s productivity deficit is its true Achilles’ heel. Low productivity undermines competitiveness far more than fiscal turbulence or market volatility.

This weakness stems from decades of underinvestment in critical sectors like science, technology, logistics, energy infrastructure, and especially education. Even in São Paulo, the country’s most advanced region, energy blackouts remain common. Meanwhile, evidence-based educational policy barely appears in public debate.

A striking contradiction persists: policymakers who demand scientific rigor in healthcare, for example, rarely apply the same standards to education, innovation, or economic policy. Without a major breakthrough in human capital, no fiscal rule or industrial incentive will deliver sustained growth.

A Political Debate Dominated by Distractions

While Brazil should be debating its long-term development strategy, productivity agenda, and educational reform, public discourse remains trapped in political distractions. Media cycles revolve around the Bolsonaro family’s future and the fiscal debate’s daily noise.

Brazil’s fiscal difficulties are real, but they are symptoms of a deeper issue: a political and social culture resistant to reforms. Economic elites, in particular, fiercely defend privileges while opposing even modest adjustments — seen recently in the fierce resistance to exempt income tax for workers earning up to R$ 5,000.

This culture creates a fragmented, protectionist, and self-interested society, where any attempt at fiscal reform becomes a prolonged battle of attrition.

Brazil Risks Another Cycle of Stagnation Without Structural Reforms

For now, markets continue to celebrate. But beneath the surface, Brazil is accumulating risks that could trigger a painful correction. Without a strategic shift toward higher productivity, high-quality education, innovation, and responsible fiscal planning, the country risks entering another period of stagnation — or facing a crisis that forces delayed reforms.

Brazil’s future depends on confronting the fundamentals: investing in human capital, strengthening institutions, and abandoning the cycles of fiscal populism and short-termism that have historically held back Latin America’s largest economy.

Brazil’s Record-Low Unemployment Masks a Structural Economic Trap, Economists Warn

On November 28, 2025, Brazil celebrated an important event when unemployment dropped to 5.4%, which was the lowest percentage ever recorded. Newly employed people in the labor market are receiving an average salary rise of 7%, and total payroll earnings are "top of the chart," as per one source. Brazil, in terms of the economy, is thought to be in the middle of a boom. But, on the other hand, what if this celebration is just the beginning of a heavy hangover from the past? Economist Paulo Gala says that the country may be hastily approaching a structural wall, not due to crisis or bad policies but owing to the very limits of Brazil's economic model.

A Boom Built on Quantity, Not Productivity

Gala maintain that the Brazilian economy is not growing due to innovative methods or higher efficiency, but merely as a result of a higher number of workers being brought under the umbrella of the labor market. More people are employed in the economy, not productivity increases of the workers or firms. The downside? This model has a shelf life, and Brazil is just now reaching that point. The signs point towards a crucial moment: businesses are not firing employees; rather, personnel are leaving to accept better-paying positions. The creation of payroll jobs is decelerating not because of the unavailability of job positions, but rather because there are no workers willing to take them. Brazil has ultimately exhausted the demographic potential for this growth model.

The Demographic Wall

Numerous nations aspire to arrive at a situation where there is a shortage of labor. However, this "good problem" turns out to be perilous if productivity does not increase with the workforce. A case in point is South Korea, which relied on full employment as a launch pad for a huge tech upgrade. Brazil, however, attained full employment without changing its low-complexity economic structure; what Gala refers to as a 1.0-liter engine trying to compete in a Formula 1 race.

Rather than boosting the engine, Brazil just pressed the accelerator more vigorously.

A Fragile 2026 Ahead

The anticipations for 2026 indicate an even more rapid momentum. Alterations of income tax brackets along with election-year spending will increase the disposable income of consumers. The economy could still surpass analysts' expectations with greater GDP growth.

However, this expansion has limitations: it is fueled by the number of workers, not by their efficiency. When the pool of workers readily available is used up, this approach comes to an end.

Nicolas Kaldor’s Theory: Brazil’s Structural Trap

The situation described is similar to a theory suggested by British-Hungarian economist Nicholas Kaldor a long time ago. He was of the opinion that a country's overall economic growth in the long run is largely determined by the structure of its output, particularly its ability to produce increasing returns to scale, which is the capacity for efficiency improvements as the production output rises. High-tech and modern manufacturing industries are similar to software applications in that they have the potential for huge market expansion — millions of users instantaneously with almost no extra cost. On the other hand, low-skilled service sectors are like barbershops in that if one wants to double the output of such a service, one would need to double the manpower and the physical capacity as well.

The economy of Brazil continues to be in the state of "barbershop mode." A cycle of structural inflation is triggered whenever the economy reaches full employment and salary increases take place at a faster rate than productivity.

The ultimate effect of the labor cost increase along with the unchanged efficiency of the company is that the company must raise prices, which in turn will lead to a decrease in the real income gains that workers have just experienced.

Why Monetary Policy Isn’t Enough

Increasing the interest rates would lead to a decrease in demand but would not resolve the issue of a structural productivity gap. Kaldor cautioned that either way using monetary policy alone would only cure the symptom and not the disease. Investment is disallowed by high rates and investment is exactly what Brazil requires to upgrade its industrial base.

The Only Path Out: A Productive Transformation

Brazil has to make a complete overhaul of its economic productive structure according to sources that are influenced by Kaldor's framework. This transformation will include but not limited to::

• Merging high-complexity industrial sectors – More than just the number of factories; factories that manufacture advanced products.
• Creating technological abilities at home – Moving from being importers or owning plants to being developers of technology.
• Encouraging the confluence of industries with increasing returns to scale – The sectors where the rise in production is accompanied by an increase in efficiency.
• Setting up a nationwide system for innovation and skill transfer – Persistent funding for R&D, training, and progressive industrial policy.
  

Embraer: A Global Aerospace Power Built on Public Resources

Embraer is one of the most prominent cases in this regard. The major airplane brazilian manufacturer was situated next to the Technological Institute of Aeronautics (ITA) to start with, a research institution that received only public funds and later on grew as a state-owned enterprise. It was only after the development of Embraer as a company was marked by cutting-edge technology, a creation of a strong supplier base, and the company's integration into the international competitive environment that the privatization process initiated.

The government, through its procurement, is still today one of the company's major support sources, like public support in the US.

The insiders responsible for Embraer’s privatization contend that the deal was made with the aim of maintaining the country’s strategic control even though the company turned into a private global leader in aerospace. The process of privatization, as stated, was equipped with tight safeguards: control by foreigners was not allowed, no single investor could occupy more than a third of the shares, and the Brazilian government kept a golden share, a special class of stocks that is limited to one and has the power to veto decisions concerning national security and strategic operations. These measures were actually enforced to keep the military part of Embraer under state control and at the same time, the company was allowed to expand to the international market competitively. When, during the Bolsonaro administration, there was one more attempt to get around these regulations and shift control to Boeing, it resulted in lawsuits, regulatory complaints, and political opposition. The agreement was ultimately scrapped and Embraer stayed an independent Brazilian company —proof, according to detractors, that privatization does not automatically endanger national interests when adequate institutional safeguards are in place. In any case, and despite attempts to transfer a company that cost billions of reais of Brazilian taxpayers to an American company during the Bolsonaro administration, the case of Embraer proves that Brazil is capable of succeeding if it creates a whole productive ecosystem rather than just a few individual companies.

Embrapa: The Public Engine Behind Brazil’s Agribusiness Boom

The Brazilian agribusiness sector, which can be likened to a giant, has its glorious rise traced back to Embrapa, the public research institution, which laid the foundations of agricultural science and technology through heavy investments. Private sector, indeed, would not have ventured into the area of research marked by longevity and high risk. Public financing took the opportunity, thereby changing the scenario and making the Brazilian agriculture a world leader.

How Strategic Public Investment and Industrial Policy Can Boost Brazil’s Global Competitiveness

Regardless of political stories that imply the opposite, big economies such as the US are totally dependent on public spending to stimulate new product development and keep the industry competitive. Experts assert that Government procurement plays a crucial role in the U.S economy and attracts trillions of dollars, which is a practice generally connected with state-led or "socialist" development models even though the American rhetoric is completely opposite. The rationale is straightforward: when an investor establishes a potentially successful firm, the state automatically becomes a purchaser of the entire output, promising to buy it for many years. This way of securing the area for a long time enables the companies to expand their inventions and become contenders on the international market.

Brazil is currently in a complex situation: a temporary boom mixed with a long-term fragility. The pitch of the country's growth now comprises a limited resource (available laborers) rather than an unlimited one: knowledge and productivity.

If there are no fundamental changes made to the economy, then wages will continue to rise in contrast with productivity that is not growing, thus, a cycle of inflation and stagnation will always persist. The formula for promoting growth that is sustainable is very clear but difficult to implement. It demands vision, consistency, and a commitment of several decades. For this, the following is necessary::

• Increasing returns to scale activities (sectors where more production results in greater efficiency);

• Creating a country-wide system for innovation and technical learning (making huge outlays in R&D, technical training, and supportive industrial policy).

Brazil needs to establish and support a national ecosystem increasingly focused on innovation and technical education. To achieve this goal, large-scale funding for research and development, technical education, and a sound industrial policy are some of the key points to be implemented. But, in a political and business climate always focused on the next quarter or the next election, who will take the lead in an economic strategy that may take 20 or 30 years to show results?

nstech Aims to Solve Brazil's $100 Billion Logistics Problem with Unique Innovation

Brazil, a country of continental dimensions, faces the inherent challenge of high logistics costs. To compete effectively in distant markets such as Japan, the UAE, and the European Union, the nation must overcome significant hurdles, including high internal and external freight expenses. Experts warn that without adequate modernization, particularly in port infrastructure depth to accommodate larger vessels, the country's ability to export will be severely compromised.

Despite these challenges, recent years have been positive for Brazil's logistics infrastructure. Historically problematic sectors have seen significant progress, notably in the railway segment. This shift is driven by new concessions and the "authorization model," which allows private operators to build and manage railways at their own risk, attracting billions in investment.

The company nstech is responsible for a new solution to address all the challenges presented by logistics, which has long been one of Brazil's main problems. The company solution is revolutionizing the logistics sector by moving beyond isolated systems. nstech has developed the TNS (Transportation Network System), an ambitious, AI-powered digital network that integrates the entire supply chain. This platform could transform Brazil into a global digital logistics powerhouse.

Brazil wastes almost $100 billion every year — the equivalent of half a trillion reais — due to inefficient logistics. It’s one of the biggest components of the so-called Custo Brasil.

The repercussions are drastic: transport firms fail, freight forwarders are heavily impacted, and lives are lost in accidents while the entire process keeps running as if there are no issues. One reason for this constant downfall stands out: companies are unable to handle the problem by themselves.

However, the nstech app turned the problem into an opportunity. The company spotted the light that had gone unnoticed by all others. They discovered that it was not the technology that was lacking but the real bonding among the participants in the logistics chain that was missing..

Their solution, called TNS, is something that neither American, Chinese, nor European tech giants have been able to build. The idea is deceptively simple: imagine if Brazil’s entire logistics network worked like a single app on your phone. With one click, companies instantly connect with 75,000 partners — without bureaucracy, delays, or expensive integrations.

It really looks like something straight from the future, but it is already happening in the everyday world. Even China, the country that probably has the most sophisticated digital infrastructure ever, does not have such a system. The same goes for the USA and Europe. TNS is a one-of-a-kind Brazilian innovation that was developed in partnership with clients for the purpose of solving a significant Brazilian issue worth hundreds of billions of dollars.

The platform is enabled by a very simple mathematical concept: network effects. The joining of each new company makes the entire system even more effective for the others - just like WhatsApp, Uber, or Waze. Through the usage of AI, TNS is continually learning from millions of daily operations, thus optimizing and upgrading its performance all the time.

While traditional logistics firms compete for scraps in a stagnant market, TNS is building an entirely new one — with the potential to return R$500 billion to Brazil’s economy.

This modernization is already yielding results, moving away from a heavy concentration on mineral and fuel transport to include agricultural bulk and, increasingly, container transport via rail.

Another positive development inrecente years is the effective embrace of intermodality in Brazil. This involves eliminating long-haul road segments by transferring grain from trucks to rail wagons, which then connect to fluvial terminals in the Midwest. From there, barge convoys transport the cargo to northern ports for transfer to oceanic vessels.

This growing sophistication, coupled with the expansion of coastal shipping (cabotage) and port terminal investments, is reshaping Brazil's logistics matrix. While the transition generates natural conflicts, the overall trend is one of increased efficiency and a more sophisticated supply chain, which will, in turn, demand advanced risk and insurance solutions from the market.

Brazil Scores Diplomatic Win as U.S. Drops Tariff Threat Under Trump

U.S. tariffs have become a political tool to test who aligns with Washington and who sides with China. Brazil finds itself in a unique position: it is economically dependent on both countries, its two largest trading partners.

Historically, Brazil has maintained a balanced, non-aligned foreign policy, making it unlikely, and harmful, for the country to break commercial ties with either power. Cutting relations with China, for example, would be devastating for Brazil’s economy, given the scale of exports like soybeans.

In this global tug-of-war between the U.S. and China, Brazil is caught in the middle and must carefully navigate both relationships to avoid economic damage.

Brazil’s recent success in avoiding planned U.S. tariffs under Donald Trump is being hailed as a significant diplomatic victory for President Luiz Inácio Lula da Silva’s administration. The decision, which reversed measures that could have harmed key Brazilian exports, has reshaped political debates both inside and outside the country.

According to analysts, conservative groups in the United States who supported former president Jair Bolsonaro were visibly frustrated by the outcome. Their expectation was that Brazil would concede under pressure. Instead, the Lula government maintained a firm but moderate strategy that ultimately prevailed.

Experts note that the Brazilian government avoided retaliation, opened space for negotiation, and waited for economic dynamics to shift. Many Brazilian products targeted by the proposed tariffs, such as coffee, meat, and fruit, are essential to U.S. supply chains. As prices began rising domestically, the political cost of imposing tariffs grew for Washington.

Even The New York Times reported that Brazil had “outplayed” the Trump administration in this dispute, highlighting the effectiveness of Brasília’s low-profile diplomatic approach.

Brazilian economists argue that the victory reflects not only political strategy but also national interest. Tariffs would have harmed Brazilian exporters and threatened access to one of Brazil’s largest trading partners.

China, Global Shifts, and Brazil’s Economic Path

The discussion also connects to broader transformations in the global economy. China’s rise as a manufacturing powerhouse illustrates how export-led growth can reshape international power dynamics. While Brazil cannot replicate China’s model, particularly given its democratic framework and different labor protections, experts say there are lessons in competitiveness, industrial strategy, and international integration.

South Korea is often cited as an example more comparable to Brazil. The country invested heavily in basic education, technical training, and export-driven industrial development, enabling companies like Samsung and Hyundai to become global leaders. Brazil, by contrast, maintained a protected domestic market that discouraged innovation and global competitiveness.

Reducing Inequality: The Road Ahead

Specialists argue that Brazil’s path to reducing inequality involves a combination of progressive taxation, expanded access to education, and a stronger technical-training infrastructure. Measures such as the recent increase in the income-tax exemption threshold to R$5,000 are seen as steps in this direction, although far from sufficient on their own.

The debate also revisits proposals for a universal basic income, originally championed by Senator Eduardo Suplicy, which would require a much more progressive tax system to be financially viable. Current targeted programs, like Bolsa Família, remain essential for reducing extreme poverty.

Economists point out that claims that welfare recipients refuse work due to benefits are unfounded. In most cases, low wages (not social assistance) are the real barrier to better economic outcomes.

Brazil must deepen its strategic thinking by prioritizing a national development project. No country can secure its future without the capacity to define its own path. Achieving this requires both a clear national strategy and the creation of a new political majority committed to this long-term vision.

Brazil–China Mega Rail Deal and Expanding Chinese Influence in Brazil’s Infrastructure, Ports, and Energy

Brazil and China have taken a major step toward deepening their strategic partnership with the signing of a new agreement to restart studies for a transcontinental railway linking the Atlantic and Pacific Oceans. The project, often called the Brazil–Peru Bioceanic Railway, would begin on Brazil’s northeastern coast, in Bahia, cross several states, enter Peru, and reach the Port of Chancay, which is a mega–terminal recently inaugurated by Chinese president Xi Jinping and financed through China’s global Belt and Road Initiative.

Although the accord does not authorize construction yet, it revives a plan first studied in 2015 and shelved afterward. Officials from both countries emphasized that updated studies are essential to move the project forward. The railway could cut export transit times from Brazil to Asia from 40 days to about 28, significantly boosting competitiveness for agricultural and mineral shipments.

The initiative aligns with China’s broader strategy in Latin America: using infrastructure investment to expand commercial, logistical, and diplomatic influence. Even though Brazil is not formally part of the Belt and Road Initiative, Chinese capital is already deeply embedded across the country’s key economic sectors.

China’s Expanding Footprint in Brazil

Agriculture:

China has quietly become a dominant player in Brazil’s grain trade. COFCO, China’s state-owned agribusiness giant, is now Brazil’s largest agricultural exporter, handling 17 million tons of soy, corn, and sugar last year. Nearly 80% of Brazilian soy goes to China, and 9% of all soy sacks exported pass through COFCO-operated terminals.

In the Port of Santos, COFCO is boosting its capacity from 4 to 14 million tons per year with its new STS11 terminal, set to become its largest facility outside China.

Ports and Logistics:

China also controls major container and oil logistics hubs:

• CMPorts, China’s biggest port operator, controls the TCP terminal in Paranaguá, responsible for 11% of Brazil’s container movement. The company recently committed R$ 1.5 billion to expand operations.

• CMPorts is set to acquire 70% of the Açu oil terminal, which handles 30% of Brazil’s crude exports and potentially grant China influence over one-fifth of Brazil’s oil outflow.

Rail and Passenger Transport:

Chinese influence has expanded into passenger mobility as well.

The São Paulo–Campinas Intercity Train, auctioned in 2024, is being built by a consortium in which CRRC, China’s state rail manufacturer, holds a 40% stake. The project requires R$ 14 billion and is slated to open in 2031.

CRRC also secured a R$ 3.1 billion contract in 2025 to supply 44 new trains to the São Paulo Metro.

Energy and Industrial Ecosystem:

China’s infrastructure network in Brazil is supported by Chinese-owned energy giants:

• State Grid, controlling CPFL, manages 15% of Brazilian electricity distribution.

• CTG (China Three Gorges) produces 3.5% of Brazil’s energy.

These companies rely heavily on Chinese-made solar panels, which represent 80% of global production.

Meanwhile, part of the oil passing through Açu comes from Chinese offshore operators CNOOC, CNPC, and Sinopec, reinforcing an integrated investment chain.

A Global Strategy That Works

Experts say China’s approach — creating interconnected investments across rail, energy, ports, and agriculture — mirrors what some Brazilian entrepreneurs once dreamed of, but with far greater financial and political backing. Unlike failed private attempts at building integrated industrial ecosystems, China’s state-supported model has succeeded across continents.

What Comes Next?

The revived bioceanic railway studies signal a new phase in Brazil–China relations. If the project moves ahead, it will reshape South American logistics, accelerate trade with Asia, and deepen China’s already significant influence in Brazil’s most strategic sectors — from grains to oil, from electricity to railways.

And although Brazil has not officially joined the Belt and Road Initiative, the scale and depth of Chinese investments suggest that, in practice, the partnership is already well underway.

China, for example, avoided the rise of slums through long-term urban planning that decentralized economic development and controlled internal migration through the hukou system. By creating economic hubs across the country, it reduced the need for mass movement to major cities.

Brazil took the opposite path: jobs concentrated in Rio de Janeiro and São Paulo, triggering disorganized urban growth, the expansion of favelas, and the strengthening of criminal networks, fueled in part by the country’s role as a major drug route.

Experts argue that recurring police operations have failed to address the structural causes of urban disorder. Lasting solutions will require coordinated, long-term public policies that move beyond political polarization and primarily target large infrastructure projects, which are essential because they make domestic production more competitive and attract new businesses. At the same time, they generate direct and indirect jobs, increasing people’s purchasing power and further boosting the economy.

Brazil’s Unemployment Hits Record Low, but Job Creation Slows: Economists Warn of a Productivity Bottleneck

Brazil’s labor market continues to defy expectations as new data released this Friday, November 28, shows the national unemployment rate falling to 5.4%, the lowest level recorded since the current PNAD Contínua survey series began in 2012. Despite global markets operating with reduced liquidity due to the U.S. Thanksgiving holiday, Brazil stands out with what analysts describe as near-full employment.

However, beneath the headline and historic number, specialists warn that job creation is decelerating, even as the market remains historically tight.

Slowing Job Creation, Despite Record-Low Unemployment

According to the PNAD Contínua, unemployment is dropping further and is expected to reach 5.3% by the end of 2025, according to projections from labor-market economist Bruno Imaizumi of 4intelligence. But seasonally adjusted data reveals a more nuanced picture: once temporary or calendar-related effects are removed, Brazil’s unemployment rate stands at 5.8%, a low level, but one that has remained flat since July, indicating stabilization rather than continued improvement.

Economists also foresee a temporary rise in unemployment in early 2026, driven by the annual reversal of holiday-season hiring. Companies typically lay off workers in the first quarter after expanding production and sales for the Christmas period. Still, even with this seasonal uptick, Imaizumi expects the early-2026 unemployment rate to remain below the level seen in the first quarter of 2025.

Caged Data Confirms Labor-Market Cooldown

Signs of deceleration are also visible in the latest Caged report, which tracks formal employment based on company filings. In October, Brazil created 85,000 formal jobs, a 35% decline compared with October 2024 and the weakest result for the month in the past five years. The slowdown reinforces economists’ assessment that while the labor market is still hot, its momentum is gradually easing.

A Heated Labor Market Still Showing Structural Weakness

Brazil’s job market remains historically strong. Companies report difficulty finding workers, voluntary resignations have hit multi-year highs, and admission wages have risen 7%, indicating strong competition for labor. Real wages are up 4% year over year, and the real wage mass has increased by 5.5%, helping 1 million families leave the Bolsa Família program as average monthly household income climbed from R$3,000 to R$3,500.

But economists as Paulo Gala warn that Brazil’s growth is concentrated in low-complexity service sectors, with only modest industrial recovery and limited gains in productivity or technological sophistication. This pattern reflects a neoclassical growth model, where employment expands but productivity stagnates, creating structural limits for wage increases and fueling inflationary pressure.

Without productivity gains, companies protect margins by raising prices, risking an economy that may stall under inflation, unable to sustain current levels of wage growth and job creation over the long term.

Monetary Policy Outlook

Given the combination of record-low unemployment and slowing, but still tight, labor indicators, analysts argue that Brazil’s Central Bank is unlikely to begin cutting interest rates in January. A possible move may come in March or April, depending on how inflation, productivity, and labor-market dynamics evolve.

The Challenge Ahead

Brazil’s economy is generating jobs, lifting incomes, and reducing dependency on social programs — all milestones worth celebrating. But economists stress that without a shift toward higher productivity, reindustrialization, and greater economic complexity, the current cycle may be difficult to sustain.

The country now faces the critical challenge of transforming today’s labor-market strength into long-term, productivity-driven, sustainable growth.

What Is SEGOB? How Brazil’s New Biomethane Certificate Market Will Work in 2026

Brazil’s new SEGOB system is set to reshape the biomethane market in 2026, creating a regulated pathway for producers to generate and sell environmental certificates tied to biomethane production. Today, much of the biomethane used for self-consumption is not registered with ANP because producers do not need to meet strict fuel-quality standards when using the gas internally. With SEGOB, however, internal users can monetize environmental attributes, as long as their plants comply with ANP specifications and certification rules.

This change in regulations has made it very significant for the biogas professional. The installations will have to purchase chromatographs, have lab reports, and install monitoring systems (all these upgrades could together cost up to R$ 2 million). The large producers will be able to adapt without much of a problem, but the small ones might find it hard to bear the compliance costs.

One of the main doubts is whether double counting will happen or not. The ANP has to decide whether SEGOB can be used alongside other environmental certificates, for example, Guarantees of Origin or RenovaBio CBIOs. The matter is very crucial for landfill-based biomethane as theoretically the same molecule could give rise to two different certificates.

The first mandatory target of 240,000 m³/day of biomethane is seen as small and not creating a new wave of projects. Biomethane-producing facilities are constructed because the buyers need the molecule and not just the certificate. In any case, the mandate can prove advantageous for financing as it allows for long-term contracts with gas distributors having high credit ratings.

In 2026, the SEGOB market will enter a learning phase. Producers, certifiers, and registrars will need to adapt quickly, and the system’s evolution will depend on ANP’s final definitions, especially on validity rules, autoconsumption verification, environmental claims, and double-counting prevention. Broader discussion is expected throughout 2026, including at industry events such as IRC Day, when the regulatory framework and market behavior will be clearer.

Apart from that, the new provisions explicitly state that it is not sufficient for environmental declarations to merely procure physical biomethane. Along with it, the companies have to acquire the respective origin certificate as well. This move not only aligns with the Greenhouse Gas (GHG) protocol but also empowers the voluntary market by giving corporations the authority to retire the certificates as part of their decarbonization plans.

Biogas vs. Biomethane: Key Differences and Why They Matter for Brazil’s Clean Energy Future

Biogas and biomethane, are you familiar with them? They are not identical products, though their names are quite alike. Nonetheless, by these means the waste of daily life could be transformed into energy that is both clean and renewable.

In Brazil, organic waste is a problem that is often associated with environment. Yet this very material can turn out to be one of the major energy solutions of the country.

What Is Biogas?

Biogas is produced naturally when organic matter decomposes in environments without oxygen. This includes food scraps, animal manure, agricultural waste, vinasse from ethanol production, and the organic fraction of urban waste that ends up in landfills.

During decomposition, microorganisms break down this material and release biogas, a mixture primarily composed of carbon dioxide (CO₂) and methane (CH₄).

And here’s the key point:

Methane is a greenhouse gas about 25 times more powerful than CO₂.

If released into the atmosphere, it accelerates global warming. But when captured and treated, methane becomes a renewable energy source with significant environmental and economic value.

Today, biogas is widely used around the world to produce electricity, heat, and fuel. In Europe, industrial plants convert agricultural waste into energy capable of supplying entire communities.

Brazil’s Untapped Potential

With a strong agricultural sector and a high volume of urban waste, Brazil has one of the world’s largest potentials for biogas and biomethane production.

Because the country already has a predominantly clean electricity mix, the greatest opportunity lies in upgrading biogas to biomethane.

What Is Biomethane?

To produce biomethane, biogas undergoes purification. During this process, impurities are removed, humidity is eliminated, and CO₂ and nitrogen are separated.

The result is biomethane, a gas containing around 95% methane, with high calorific value and performance comparable to natural gas. In other words, a 100% renewable fuel capable of replacing fossil fuels in industry and transportation.

Biomethane can:

• Supply boilers, furnaces, burners, and other industrial equipment
• Fuel light and heavy vehicle fleets, including buses and trucks
• Reduce dependence on diesel and natural gas
• Lower emissions and improve energy efficiency
• Double Environmental Benefit
• Using biomethane offers two major environmental gains:
• It prevents methane from waste from reaching the atmosphere.
• It replaces fossil fuels, significantly reducing greenhouse gas emissions.

Replacing the diesel used by a single truck is comparable to planting more than 100 trees per year, showing how large-scale adoption can generate massive climate benefits.

Driving Local Development

Produced in Brazil, biomethane strengthens the local economy, creates green jobs, and stimulates new value chains. Every ton of CO₂ avoided contributes directly to national decarbonization and the global energy transition.

Biogas + Biomethane: A Circular Economy Solution

To sum up:

Biogas is generated from the decomposition of organic waste.

Biomethane is the upgraded, purified version of biogas, a high-efficiency, 100% renewable fuel capable of replacing fossil sources in industry and transportation.

This technology brings together circular economy principles, sustainability, and innovation, positioning Brazil as a global leader in clean energy.

Unioeste Boosts Renewable Energy Innovation in Western Paraná

Unioeste (Toledo campus) is emerging as a key research center for renewable energy in western Paraná, in the southern region of Brazil, a region dominated by agroindustry and high waste production. Led by professor Carlos Eduardo Borba, the university is developing advanced technologies to convert locally abundant biogas into biomethane and hydrogen, clean fuels essential for Brazil’s energy transition.

The team focuses on two core areas:

Biomethane production through selective adsorption that removes CO₂ and H₂S, creating a renewable fuel comparable to natural gas.

Hydrogen-rich syngas generation using dry reforming and shift reactions to transform methane and CO₂ into high-value industrial gases.

The research integrates major innovation networks such as NAPI-H2 and NAPI-Biogás and uses advanced mathematical models to determine the most efficient and economical use of biogas in each scenario.

These technologies help reduce methane emissions, convert agricultural waste into energy, and support cleaner transportation and industrial processes. Unioeste strengthens the regional circular economy by turning scientific research into real-world sustainable solutions.

New Oil Discovery in Campos Basin Boosts Petrobras’ (PETR3; PETR4) 2025 Exploration Record

Petrobras revealed a new oil discovery this week in the Campos Basin, off the coast of Rio de Janeiro, reinforcing momentum in what has become one of its strongest exploration cycles in years. The find, located 108 kilometers from the coast in the southwestern portion of the Tartaruga Verde field, sits in the post-salt layer at a relatively shallow depth of 734 meters, conditions the company says will help reduce extraction costs.

This marks Petrobras’ third oil discovery of 2025, following earlier announcements in February and May in the prolific Santos Basin. Unlike those pre-salt finds, located nearly 2,000 meters underwater, the latest discovery is in a more accessible geological layer.

According to sources familiar with the project, Petrobras plans to accelerate development by leveraging existing platforms and infrastructure. A dedicated working group will design the production strategy, which is expected to rely on pipeline connections to nearby facilities with available processing capacity.

The new discovery fits perfectly with Petrobras' main plan to restore the Campos Basin which used to lead Brazil's oil production but currently produces only around 20% of the country's total output. According to analysts production levels have the potential to increase from 820000 barrels per day to reach 1 million barrels per day. 

The announcement comes as production levels reach their highest point. In the third quarter of 2025, Petrobras’ operated output reached 4.5 million barrels of oil equivalent per day, with the company itself producing 3.1 million barrels, a significant increase compared to the same period in 2024. 

The company plans to increase its exploration activities on the Equatorial Margin which scientists estimate contains 30 billion barrels of oil that exceed Petrobras' current reserves by almost three times. 

The company directs large financial resources toward maintaining its fast exploration and production growth. The third quarter saw CAPEX reach its highest level at US$5.5 billion which represents a 28.6% increase in total investments from the previous year.

The company has achieved strong performance results which provide benefits to its shareholders. 

Petrobras distributed more than R$ 32 billion in dividends across the first three quarters of 2025 and is projected to deliver an annual dividend yield above 9% at current share prices. 

Through recent discoveries and increased production efforts and substantial funding dedicated to unexplored areas Petrobras continues to strengthen its position as a top-performing global oil producer.

Brazil’s Biogas Sector Accelerates, With Biomethane Set to Surge by 2032

National policies for transforming waste into energy were a highlight of the roundtable “Applications of Biogas in the Brazilian Agro-Industry,” held in Belém (PA) this month. The discussion took place at the House of Science, a space hosted by the Ministry of Science, Technology and Innovation (MCTI) at the United Nations Climate Change Conference (COP30).

In recent years, Brazil has been undergoing a true revolution with regard to biogas and bioethanol. The former is a renewable energy source generated from the decomposition of organic waste produced in different economic activities. The latter is a flammable biofuel produced from the fermentation of plant biomass, such as sugarcane, corn, and beet, and their residues, such as bagasse.

Brazil's biogas industry will experience a period of quick growth according to the 2024 Biogas Outlook from SEI Biogás. The report shows that the country operates 1,633 biogas plants which represents an 18% increase in renewable gas production comparing to 2023. 

Therefore Brazil's renewable energy landscape is undergoing a significant transformation, driven by the burgeoning potential of biogas, biomethane, and waste-derived fuels. Recent policy discussions and market data underscore the country's ambition to leverage organic waste and residues to enhance energy security, reduce reliance on fossil fuels, and meet environmental sustainability goals. This report synthesizes the current state, future projections, and key regulatory dynamics shaping Brazil's waste-to-energy sector.

The Biogas and Biomethane Revolution

Biogas, a renewable energy source generated from the decomposition of organic waste, and bioethanol, a flammable biofuel produced from plant biomass, are at the forefront of this energy shift. Brazil's biogas industry is poised for a period of rapid expansion, fueled by improved regulations, favorable economic conditions, and the growth of integrated waste management systems.

According to the 2024 Biogas Outlook from SEI Biogás, the country currently operates 1,633 biogas plants, representing an 18% increase in renewable gas production compared to 2023. This growth is a direct result of three primary factors:

1. Improved Regulatory Frameworks: Creating a more predictable and attractive investment environment;

2. Favorable Economic Conditions: Making biogas projects increasingly competitive;

3. Integrated Waste Management: Expanding the availability of feedstock for biogas production.

Looking ahead, specialists project a profound energy transformation. Talyta Viana, Regulatory Technical Coordinator at ABIOGÁS, projected that Brazil could reach 200 biomethane plants by 2032. These facilities would be capable of generating 7.92 million cubic meters of biomethane per day, which is enough to supply over 10% of the nation’s 2024 natural gas demand.

The sugar-energy sector is expected to be a crucial anchor for this growth, with Viana noting that "More than 52% of upcoming projects will rely on sugarcane residues such as vinasse, filter cake, and potentially bagasse and straw, which are under technological assessment." With strong feedstock availability and a favorable regulatory landscape, analysts predict that biomethane production could triple by 2026, positioning Brazil as a global leader in renewable gas.

Regulatory Momentum and Industry Leadership

The sector's positive trajectory was a key highlight at the roundtable “Applications of Biogas in the Brazilian Agro-Industry,” held in Belém (PA) during the United Nations Climate Change Conference (COP30).

The Brazilian Association of Waste-to-Energy (BREM) is playing a central role in advocating for and shaping the regulatory environment. A discussion hosted by Gás Orgânico, featuring CEO Giovane Rosa and BREM President Yuri Schmitke, demonstrated the positive sector trends resulting from recent regulatory changes.

A crucial turning point for the industry was the federal government's approval of the “Fuel of the Future” law, which BREM actively supported. Following this legislative success, BREM is now working to establish the National Biomethane Zero Program and a biogas electricity certification system to ensure these resources are properly valued.

BREM's efforts extend to integrating biogas into the broader energy matrix. Schmitke highlighted how biogas systems can complement distributed solar power by using gasometers to store biogas when solar generation is high and release it when solar power decreases, thereby stabilizing the grid.

Furthermore, BREM has made an extensive contribution to the development of Brazil’s sustainable finance taxonomy. The association submitted a 45-page report, created with the support of the European Union Climate UCD project, which studied successful European regulatory models. The example of Denmark, which already supplies 30% renewable gas to its grid and aims for 100% by 2030 through certificates of origin, serves as a model for Brazil. To support further technical and regulatory progress, BREM has signed cooperation agreements with both the Brazilian Electricity Commercialization Chamber (CCE) and the European Biogas Association.

Untapped Potential and Remaining Regulatory Gaps

Despite the strong momentum in biogas, the broader waste-derived fuels sector still faces regulatory challenges.

Refuse-Derived Fuel (CDR)

Brazil is already utilizing Refuse-Derived Fuel (CDR), wich is a blend of industrial and urban waste, to replace fossil fuels in cement production. Currently, the country replaces 30% of the fuel used in cement production with CDR, substituting petroleum coke in clinker manufacturing. Experts believe this substitution rate could climb to 50-80%, matching European levels, provided there is investment in cement-plant upgrades and new blending facilities.

However, the CDR sector currently operates without official targets or a dedicated regulatory agency, relying only on voluntary standards issued by ABNT.

Biogas and Biomethane Potential

The biogas landscape reveals an even larger untapped opportunity. Brazil currently exploits just 3.4% of its biogas potential and 1.4% of its biomethane potential, representing what analysts describe as a R$ 300 billion market still in its infancy.

A major regulatory shift is anticipated in 2026, when a mandatory 1% biomethane blending requirement comes into force, increasing by one percentage point annually until 2036. This rule is expected to enable renewable gas to supply up to 10% of Brazil’s total natural gas demand.

Biogas also holds vast potential for electricity generation, theoretically capable of supplying 40% of national electricity consumption and offsetting up to 70% of diesel use. While full utilization is constrained by technical and economic factors, biogas is seen as a key complementary source for stabilizing an increasingly intermittent grid dominated by solar and wind power.

Industry representatives emphasize that the ongoing electricity-sector reform must properly account for the value of dispatchable renewable sources. Without clear rules for compensating biogas plants for ancillary services, such as grid stability and load balancing, the market's growth may be hindered.

Brazil's waste-to-energy sector is at a critical juncture. The combination of ambitious industry projections, supportive legislation like the "Fuel of the Future" law, and the efforts of organizations like BREM are creating a robust foundation for growth. However, unlocking the full potential of this R$ 300 billion market, particularly in CDR and electricity generation, will require strengthening the regulatory framework to provide clear targets, compensation mechanisms for grid services, and dedicated oversight. Stakeholders agree that a fresh policy framework is essential to drive new investments, create higher earnings, and ensure better environmental protection.