Economists warn that the elected president will face economic challenges, with high interest rates being the main obstacle

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.

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g1.globo.comOctober 4, 10:00

Agribusiness Association points out five necessary public policies to overcome sector challenges

The Brazilian Agribusiness Association (Abag) outlined five public policy proposals aimed at solving the obstacles faced by agribusiness, ranging from rural financing and severe climate impacts to infrastructure, dependence on imported inputs, and the need to expand external markets.

The proposals include the creation of a national policy for financing, rural insurance, and agroindustry climate resilience, aiming to establish a multi-year plan to increase sectoral resources, including a National Climate Disaster Fund.

Other suggested guidelines are an industrial policy focused on strengthening Brazilian strategic chains, stimulating local input production, and removing regulatory hurdles to accelerate the adoption of new technologies.

A national policy for agroindustrial infrastructure governance, planning, and financing was also proposed, which aims to modernize and standardize the licensing and authorization processes for projects. Additionally, Abag suggests a national policy for communication, education, and valuing the sector, with continuous actions to disseminate the role of agribusiness in food security, sustainability, innovation, and economic growth.

Finally, there is the proposal for a national policy for international insertion and competitiveness defense, which requires confronting tariff and non-tariff barriers through coordinated collaboration between government, research institutions, and the productive sector.

Experts consulted by g1 confirmed that the problems are real but have distinct natures and require long-term solutions complemented by private sector participation. Although some issues are already being addressed by the current government, difficulties persist in the execution or scale of the actions.

Rural Financing and Insurance

Felippe Serigati, a researcher at Fundação Getulio Vargas (FGV) Agro, identified cost as the main obstacle in rural financing and insurance. He pointed out that interest rates remain high due to producers' indebtedness and the increase in bankruptcy filings, leading banks to be more selective in granting credit.

Leandro Gilio, a researcher at Insper Agro Global, explained that producer default stems from accumulated losses in successive harvests caused by climatic problems, high interest rates, and rising production costs. Gilio warned that this creates a cascading effect, harming pre-production investments, and advocated for a more robust governmental intervention to prevent this cycle from consuming sector investments.

Currently, only 3% of agricultural production has insurance coverage, according to the researcher. Serigati emphasized that the adjustment must involve both creditors and debtors; creditors need time to readjust their portfolios, while borrowers must better organize their finances to demonstrate their true repayment capacity.

Furthermore, some financial institutions avoid granting this type of credit due to the operational cost imposed by the Selic rate and perceived risk, especially given climate instability. In response, the Official Gazette of the Union published Law 15.526/2026 on Wednesday (30), establishing a new regulatory framework for rural insurance, which includes the regulation of the Disaster Fund for climate damages, responding to Abag's requests.

This new legislation also made expenses for subsidizing the rural insurance premium mandatory. For the Confederation of Agriculture and Livestock of Brazil (CNA), this ensures budgetary protection against contingencies. Serigati observed that previously, rural insurance was not a compulsory expense and often suffered cuts.

Gilio added that criteria defined in rural credit policies are not always met, and even lines financed by the Safra Plan are difficult for producers to access. He reinforced the need for government investment in the sector, given its strategic importance to the national economy.

Strategic Chains

For experts, the greatest vulnerability lies in the dependence on imported fertilizers. Brazil imports approximately 80% of chemical fertilizers consumed, and a significant portion of suppliers is located in regions affected by conflicts or critical maritime routes, such as the Strait of Hormuz.

Although there is a National Fertilizer Plan aimed at increasing the country's autonomy, its results are projected for the long term. In addition to investments, it is crucial to guarantee sources of potassium, phosphorus, and nitrogen for exploitation. Carlos Eduardo de Freitas Vian, from the Luiz de Queiroz School of Agriculture at USP (ESalq-USP), stated that despite having raw materials for certain products, the lack thereof for others will force continued imports.

While the plan is not consolidated, Serigati from FGV advised diversifying suppliers to mitigate exposure to conflicts. Abag also requested increased machinery manufacturing in Brazil, although the researcher noted that the country already exports such items.

Vian pointed out that the critical dependence is concentrated in machinery components, such as chips, and considered bringing this manufacturing to Brazil unfeasible due to insufficient domestic demand. Regarding the 'regulatory backlog' cited by Abag, the Esalq professor agreed that it occurs in the approval of chemical pesticides, motivated by environmental and sanitary safety tests. He noted that accelerating these processes can carry risks, making it a difficult problem to resolve.

Agroindustrial Infrastructure

Serigati assessed that solving infrastructure challenges in just one presidential term is extremely difficult. He highlighted that infrastructure growth struggles to keep pace with the rhythm of agricultural production, which seeks an increase of almost 100 million tons in four years, comparable to the Argentine harvest.

Gilio classified this situation as serious because it significantly raises costs, directly impacting the farmer's margin, and requires public intervention. He mentioned that important projects often stall in public bureaucracy, even when they have funding and environmental studies ready.

An improvement suggested by Gilio is to intensify the integration between different modes of transport, such as railways and waterways, reducing dependence on highways. Data from the Brazilian Institute of Geography and Statistics (IBGE) indicated that in 2024, more than 1.3 million rural households lacked internet access, representing 15% of the total.

The Insper researcher stressed that this is a chronic problem that will take time to solve, and that the private sector must also contribute. However, he believed the next president could institute a state policy guaranteeing legal certainty for investments. Serigati detailed that financing works is complex and the public sector lacks resources to meet all demand, thus requiring private participation through concessions, privatizations, or public-private partnerships.

Communication and Valorization of Agribusiness

Vian observed that agribusiness faces image perception problems both domestically in Brazil and internationally. He argued that the sector urgently needs a communication plan that highlights its strengths while demonstrating a willingness to correct its weaknesses.

According to the professor, the federal government already has mechanisms for this purpose, but they can be improved. Vian suggested that Brazilian representatives, such as ambassadors, should be better prepared to communicate institutionally, recognizing the role of associations and the private sector in this process.

For Serigati, a public policy coordinated with sector actions would help position Brazil in international negotiations and expand access to new markets. Gilio cited the success of other countries, such as Colombian coffee, in building an international brand for their products, making them desired for their origin.

The Insper researcher emphasized that the sector also has a responsibility to comply with public policies, such as those related to combating deforestation, to support its image. He stressed that such a goal cannot be achieved by a single government and requires years of work.

International Insertion and Competitiveness

Serigati pointed out that the global market scenario has changed, requiring countries not only to produce competitively but also to maintain constant dialogue with buyers, which constitutes the Brazilian challenge in this aspect.

Gilio emphasized that Brazil has few long-term trade agreements, citing the absence of a pact with China, the sector's main buyer. He warned that in a context of trade war with growing barriers and tariffs, it is vital for the country to build bridges to secure these markets.

Gilio also stated that agreements bring predictability, benefiting private investments, and suggested that Brazil should anticipate potential restrictions imposed by trading partners. Another identified risk is the concentration of sales in a few countries, despite the high export volume.

For Serigati, the responsibility of participating in international negotiation tables is shared between the government, which has historically acted, and the private sector, represented by associations. Vian, from Esalq, agreed with the need for this partnership, arguing that Brazil should use its robust sanitary and environmental legislation as an argument in global negotiations. He concluded that it is easier to negotiate commercial terms by specific product than in a broader scope, provided each sector is prepared for the host country's standards.