Brazil’s economy maintained its expansionary momentum in 2025 while consolidating meaningful institutional progress, despite a global backdrop defined by elevated interest rates, geopolitical tensions, and regulatory uncertainty. A look back at the projections outlined in the January 2025 edition of Brazil Brief—which underscored the importance of tax reform, fiscal discipline, and ongoing opportunities in infrastructure, as well as in sectors such as energy, sanitation, technology, and logistics—shows that Brazil largely evolved in line with expectations, strengthening both its macroeconomic framework and institutional environment.

Improved growth prospects, easing inflation dynamics, and reinforced fiscal credibility over the second half of the year contributed to a more predictable setting for international capital.  Measures announced at the end of 2024 to rebalance public accounts advanced gradually, while the regulatory agenda, most notably the rollout of tax reform, progressed broadly as anticipated, confirming its role as the central policy axis of 2025. The expected continuity of concession programs and public-private partnerships also materialized, reinforcing previously identified structural investment opportunities.

In this context, Brazil’s role as a platform for capital-intensive investments was further validated. Performance across energy and infrastructure, alongside the maturation of privatization and partnership initiatives, supported the view that 2025 would mark a period of strategic realignment, particularly given a competitive exchange rate and sustained global investor interest in real assets.  Stronger macro fundamentals combined with greater regulatory clarity helped sustain investment flows, even amid early-year skepticism among some market participants.

This assessment is particularly relevant as Brazil enters 2026, an election year, with indicators that point to stability and continuity.  While political developments are likely to influence short-term expectations, the country approaches the electoral cycle with a consistent project pipeline, regulatory frameworks in consolidation, and institutional capacity recognized by international investors. Against this backdrop, this edition examines the domestic political landscape, the regional geopolitical context in Latin America, the first year of tax reform implementation, and the macroeconomic outlook for the year ahead.

Throughout this edition, we also assess the sectors that continue to anchor foreign investment opportunities—energy, water infrastructure, integrated logistics, export-oriented manufacturing, and technology—and outline why these segments remain attractive even in a more selective global investment environment. Overall, the progress recorded in 2025 suggests that Brazil enters 2026 with a stronger foundation for growth, supported by regulatory stability, institutional maturity, and a steadily advancing investment agenda. The objective of this Brazil Brief is to provide a clear, technically grounded overview of the regulatory and economic forces shaping Brazil’s business environment in 2026. Enjoy your reading.