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The Brazilian financial market was relatively active in 2024, particularly in the first half of the year. Incentivised debenture issuances (under Law 12.413), receivable investment funds and real estate receivables certificates were standouts amongst the fundraising activities.
However, 2024 was not a favourable year for equity instruments, with few stock issuances occurring throughout the year. The Brazil Stock Exchange also performed poorly in 2024 and continues to be negatively affected by the country’s high interest rates.
Overall, the Brazilian financial market followed the growth of the economy at approximately 4%.
While we do not have final figures for 2024 yet, based on our experience advising clients, we observed that the services sector accelerated its recovery from losses caused by the COVID-19 pandemic. For example, there were significant operations in the information and communications sectors. Exports continued to grow, albeit at a slower pace than in 2023, indicating a slowdown in sectors such as agribusiness and raising concerns for the coming year.
In 2024, we observed increased activity from foreign investors compared to the previous year.
As inflation is relatively under control, the economy is growing, and as a result we have a more stable political environment. High interest rates and a depreciated exchange rate makes Brazilian assets attractive to foreign investors, and compared to other Latin American countries, Brazil is seen as a safe place to invest.
International economic and geopolitical volatility created both opportunities and challenges for the Brazilian economy. On one hand, given the relatively stable state of the Brazilian economy it can be seen as a safe haven for international investors. On the other hand, uncertainties surrounding the policy direction of President Trump has put pressure on the exchange rate and inflation in Brazil, prompting the Central Bank to keep interest rates high.
Brazil’s economic growth for 2025 is predicted to be lower than 2024. However, these projections are based on several factors, some of which lack clarity (such as the uncertain U.S.A. economic policy). As the year progresses, and these factors clarify, the forecast may change. For example, in 2024, Brazil’s growth projection exceeded predictions, surprising the market positively. The most important thing is that regardless of international factors, Brazil continues to implement necessary reforms for sustainable, long-term growth.
In 2025,Brazil will host the United Nations Climate Change Conference. Therefore, I believe all activities related to sustainability will be in high demand in2025.
Additionally, the technology sector should continue to grow, driven by increasing investments in this area by the financial market, industry and the government.
Internationally,Brazil will continue to be impacted by a volatile economic and political environment.
In particular, we will need to closely monitor both developments in the war in theMiddle East, and how President Trump's new policies will affect us, both directly and indirectly.
Domestically, the Brazilian government needs to pursue a stronger fiscal policy, reducing the debt-to GDP ratio (historically high for our economy). Additionally, congress needs to approve the Government’s remaining proposals to cut public spending and finalise tax reform.
Brazil presents a relatively stable political and economic environment, with the Central Bank continuing to pursue inflation within the target range. Additionally, Brazil has the most developed capital market in Latin America, which is an important tool for attracting foreign investment. Finally, the country is expected to continue investing in sustainability, using instruments created this year, such as infrastructure debentures (Law 14,801) and the EcoInvest Programme.
Reducing public debt and expenditure is a key factor for the Brazilian Government to increase investor confidence. If it can achieve this goal, it could eventually regain investment-grade status from rating agencies, positively impacting the entire economy.
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Brazil's dynamic political and economic environment offers diverse opportunities. Expert guidance is essential to navigate these complexities. This selection of articles highlights why Brazil is an attractive destination for international investment.
