The president elected for the 2027 to 2030 term will find the country with its lowest unemployment rate in history and a consistently positive trade balance. However, experts indicate that the economic scenario will be adverse, characterized by deceleration amidst high interest rates.
Other obstacles to national development include low economic productivity, international instability, high household debt, and inflation projections exceeding the established target.
In conversation with experts, the g1 portal sought to understand what actions the next president can take to improve the country's economic environment.
Need for political pacification
Economist Zeina Latif, managing partner of Gibraltar Consulting and professor at Insper, argues that economic evolution fundamentally depends on an improvement in the political landscape. She emphasizes the need for a 'pacification of the country' to establish a base of support in Congress, which would strengthen the capacity to implement the economic agenda of the future occupant of the Palácio do Planalto.
Latif stresses that this step is crucial for generating confidence among economic agents, stating: 'I think the first thing, before talking directly about the economy, is the background that needs to be built towards pacifying the country, towards creating an allied base with participation in the government, and obviously, as a way to also bring confidence from economic agents. This step is very important.'
Interest rate reduction
Experts agree that the main impediment for the future president will be the high level of the country's interest rate, which has restricted economic growth, fostering default and population indebtedness.
Although the basic rate of the economy is currently at 13.75% per year, having reached 15% annually, it remains among the highest globally in real terms. The Central Bank maintains this high rate with the aim of controlling inflationary pressures and directing inflation toward the 3% target. To enable lower interest rates, analysts suggest rebalancing public finances, which implies not only resuming positive balances—something that has not occurred sustainably since 2014—but also implementing growing surpluses to mitigate the increase in public debt.
The main presidential candidates show awareness of this problem, citing the high interest rate as an obstacle to sustainable growth in their government plans. However, they do not specify how they intend to achieve the rebalancing of public accounts.
Felipe Salto, chief economist and partner at Warren Investimentos and former executive director of the Independent Fiscal Institution (IFI) of the Federal Senate, believes that the central challenge against deceleration is the recovery of primary surpluses, meaning positive balances in government accounts. He argues that this adjustment cannot be a 'shock,' but rather a long-term recovery program, whose results must be visible from the beginning, and should be proposed by the president and approved by Congress for immediate implementation.
Salto proposes discussing issues such as linkages, indexations, tax and financial subsidies, super-salaries, parliamentary amendments, military pension, and other items. Despite this, the economist points out that high popular indebtedness is not solely the responsibility of the basic interest rate, citing high 'bank spreads,' meaning final rates charged by banks much higher than the Selic rate, and advocating for the reduction of these values.
Flávio Ataliba, researcher at the Brazilian Institute of Economics of the Getúlio Vargas Foundation (FGV Ibre), observed that the current structure of public accounts (fiscal framework) still fails to dissipate uncertainties about the trajectory of these accounts. For him, the lack of a clear signal on how the country will stabilize its debt raises investors' risk perception, contributing to keeping interest rates high.
Ataliba states that a credible fiscal rule would allow for the sustainable reduction of interest rates, alleviate household debt, and create conditions to increase productivity. He concludes: 'Today there is no credible predictability that we will have a rule capable of stabilizing the debt. This generates a very large risk premium in the economy.'
Zeina Latif advocates for measures that signal commitment to public accounts to lower interest rates, even if the adjustment does not ensure the stabilization of Brazilian debt in the coming years. She supports reforms, many of which are constitutional, aimed at reducing mandatory spending. According to her, 'showing this commitment would already help to disinflate, so to speak, the economy, meaning reducing inflation expectations, reducing exchange rate volatility, reducing interest rates. So this fiscal issue is central as a foundation for macroeconomic stability.'
Unemployment and productivity
With the Brazilian economy decelerating, Flávio Ataliba, from FGV Ibre, predicted that the labor market will tend to show 'more significant effects' (loss of dynamism) throughout 2027.
Besides short-term problems, the economist highlights low productivity as a structural challenge of the Brazilian economy. He argues that a real increase in income is only achievable through productivity growth, because without it, it becomes difficult to meet the population's needs and sustain growth.
Felipe Salto agrees that unemployment may increase at some point, but believes that the turbulent period of 2027 can be overcome through the rebalancing of public accounts, including measures already adopted by the current government, such as limiting the growth of the minimum wage to the ceiling of the framework, in addition to advancing the fiscal agenda.
Zeina Latif points out that the core of the Brazilian issue lies in increasing labor force productivity and, concurrently, wages, which would also help reduce household debt. She concludes by saying: 'I think we need to rethink these consumption stimulus measures. It would be healthier for consumption to accelerate due to reforms, due to a more favorable macroeconomic environment, due to productivity gains translating into wages. That is the healthiest way, and not artificial stimuli that, later on, end up generating this financial stress for families.'
Trade policy
In the scope of international trade policy, which faces tensions due to the Middle East war—affecting the buying and selling of Brazilian products—and the tariff protectionism imposed by US President Donald Trump, economists suggest that expanding exports and opening the economy can boost investment, productivity, and long-term growth.
Salto emphasizes that, in a context of conflicts and tariffs, the challenge is to maintain the guidelines of 'ensuring Brazil's seat at negotiation tables with major economies and amplifying our historical plural and aggregating position.' He adds that growth will only return with a significant expansion of net exports, recovering the relevance of industry in light of new environmental, energy, and technological agendas.
Zeina Latif advocates for the reformulation of Mercosur, a bloc composed of Brazil, Argentina, Paraguay, and Uruguay, to grant greater flexibility in concluding trade agreements. Currently, the rules require that agreements be negotiated jointly by the bloc, not individually by a country.
Latif criticizes non-tariff barriers, mentioning discussions about double taxation and distortions, which create a 'mosaic' of rules, resulting in more bureaucracy, uncertainty, and complexity without general coherence. She concludes that Brazil is very outdated in this aspect and that, despite some agreements advancing, it would be vital to accelerate the diversification of trade partners given global risks.