1. GDP growth estimate rises to 3.2%, according to Ministry of Finance

The Secretariat of Economic Policy (SPE) of the Ministry of Finance revised its estimate for the growth of the Brazilian economy in 2024, increasing it from 2.5% to 3.2%. The new assessment comes after the announcement of a 1.4% rise in Gross Domestic Product (GDP) in the second quarter of this year, surpassing expectations, according to data from IBGE. The Secretariat also adjusted its inflation projection for 2024, raising it from 3.9% to 4.25%, reflecting a shifting economic scenario.  

Despite the positive outlook for the GDP, SPE anticipates a slowdown in the second half of 2024. Growth is expected to be 0.6% in the third quarter, below the 1.4% recorded in the previous period. The projection for 2025 was also revised, lowering from 2.6% to 2.5%, due to the potential increase in the Selic rate. Meanwhile, the inflation estimate is nearing the target set by the National Monetary Council, with an expected variation between 1.5% and 4.5%.

Agência Brasil: Fazenda aumenta estimativa para o PIB

2. Retail sales grow 0.6% in July

In July, retail sales in Brazil resumed growth with a 0.6% increase compared to the previous month, recovering part of the 0.9% decline recorded in June. In 2024, retail has already seen a 5.1% rise, and over the past 12 months, growth stands at 3.7%. This recovery was observed across various sectors, with the hypermarkets and supermarkets, food products, beverages, and tobacco sectors standing out, growing by 1.7% in July.

Other sectors also followed this positive trend, such as Personal and Household Items, which grew by 2.1% in July. Office equipment, IT, and communication materials increased by 2.2%, while textiles, clothing, and footwear grew by 1.8%. The survey also reveals that, compared to July 2023, retail sales increased by 4.4%, marking the 14th consecutive month of growth. In the expanded retail sector, which includes vehicles, motorcycles, auto parts, and construction materials, the July variation was more modest at 0.1%, accumulating a 4.7% rise for the year.

Estadão: Vendas no comércio crescem 0,6% em julho

3. Senate approves creation of credit and debt negotiation program

The Federal Senate approved the “Acredita no Primeiro Passo” Program, a federal government initiative to facilitate access to credit and the renegotiation of debts for individuals and small businesses. The program is aimed at people registered in the Unified Registry (CadÚnico) and prioritizes families in vulnerable socioeconomic situations, including women, youths, Black people, members of traditional and riverside communities, and now also people with disabilities, as per an amendment by Senator Mara Gabrilli. The funds will be guaranteed by the Operations Guarantee Fund (FGO), with the federal government contributing up to R$ 1 billion, aiming to support micro-entrepreneurs and small businesses.

The program also includes Procred 360, a line of credit for micro-enterprises and self-employed taxi drivers, with an annual revenue of up to R$ 360,000. The Ministry of Social Development and Assistance may set lower interest rates and increase the credit limit for companies led by women or recognized by the “Emprega+Mulher” Program. The bill also includes a debt renegotiation program for micro-enterprises, with special conditions for businesses with annual revenues up to R$ 4.8 million, aiming to restore access to credit and business regularization.

G1: Senado aprova programa de crédito

4. Central Bank resumes interest rate hikes, raising Selic to 10.75%

On Wednesday (18), the Central Bank’s Monetary Policy Committee (COPOM) raised the Selic rate by 0.25 percentage points, bringing it to 10.75% per year. This is the first increase since August 2022, when the rate reached 13.75% and remained at that level until August 2023. COPOM’s unanimous decision was announced without clarifying the next steps in monetary policy, indicating that future adjustments will depend on inflation. The Central Bank emphasized that despite the economic situation globally, Brazil faces more inflationary risks, such as the consistent rise in service prices and uncertainty surrounding domestic fiscal policies.

The decision was widely anticipated by the financial market, as signaled in the Focus report, and points to a cycle of Selic increases, with forecasts for further hikes this year, potentially bringing the rate to 11.25%. Copom also considered factors that could reduce inflation, such as the global slowdown and the effects of austerity in various countries. However, it stressed the importance of credible fiscal policy to anchor expectations and reduce risk premiums.  

CNN Brasil: BC retoma ciclo de alta dos juros

5. São Paulo Elections: Three-way tie and heated debate intensify mayoral race

In the race for São Paulo City Hall, the largest city in Brazil, the latest Quaest poll reveals a scenario of a technical three-way tie: Ricardo Nunes (MDB) leads with 24% of vote intentions, closely followed by Guilherme Boulos (PSOL) with 23%, and Pablo Marçal (PRTB) with 20%. Compared to the previous poll, Boulos gained 2 points, while Marçal dropped 3 points, both within the margin of error of 3 percentage points.  

The study also shows that if a second round were to take place, Ricardo Nunes would defeat both Boulos and Marçal. However, the matchup between Boulos and Marçal shows a technical tie, with Boulos slightly ahead.

G1: Quaest: Nunes tem 24%, Boulos, 23%, e Marçal, 20% e mantêm empate triplo na disputa por SP