Ir para menu Ir para conteúdo principal Ir para rodapé
The Brazilian government submitted to Congress the Budgetary Review Law (PLDO) for 2025 to Congress, altering the fiscal primary surplus target for 2025 to 0.0% of GDP (from +0.50%).

Talk of the Day 



The government submitted to Congress the Budgetary Review Law (PLDO) for 2025 to Congress, altering the fiscal primary surplus target for 2025 to 0.0% of GDP (from +0.50%). This proposal outlines the federal government's goals and priorities for the upcoming year and serves as the foundation for the 2025 budget, which will be revealed towards the end of the year, detailing all government expenditures. The PLDO also establishes guidelines for the fiscal target and the minimum wage in 2025, with the latter set at BRL 1,502 (from BRL 1,412 currently). The Budgetary Review Law now requires discussion and voting by Congress. We currently forecast a primary deficit of 0.9% of GDP in 2025, worse than the expected result of 2024 (a 0.6% deficit).

IDAT Report: Activity grew 3.9% mom/sa in March. The IDAT-Activity grew by 3.9% mom/sa, with an increase in the IDAT-Services (4.0% mom/sa) and IDAT-Goods (3.9%). In both IDAT services and IDAT goods, the increase was widespread across the categories. March preliminary estimates suggest the services offered to households (PMS) expanded 1.5% mom/sa, 0.6% mom/sa in the broad retail sales (PMC), and +0.7% mom/sa in the core index (PMC). **Full story here.

Tomorrow’s Agenda: IGP-10 inflation for April will be published. We expect a 0.30% monthly decrease, leading the annual rate to -3.8%, from -4.1% in March. Industrial wholesale prices may continue to post some deflation, reflecting lower iron ore prices, while agricultural wholesale prices may accelerate, reflecting higher soybean prices. Moreover, the central-bank’s weekly survey with market participants will be released.



 Retail sales and manufacturing fell sequentially in February. Real retail sales contracted 1.8% YoY in February (-4.1% in January), closer to our -1.5% call, while milder than the Bloomberg market consensus of -2.7%. Core retail sales (excluding fuels and vehicles) fell 1.4% from January (MoM/SA, +0.5% registered in the previous month), leading to a 1.1% YoY decline (-4.2% in January).  Meanwhile, manufacturing contracted 0.5% MoM/SA (-0.5% in January), leading to an 2.2% YoY decline (-4.3% previously), less than the Bloomberg market consensus of -2.8% and closer to our 2.5% drop. We expect the monthly activity indicator to rise 1.4% YoY (risk tilted to the upside, to be published on Thursday 18). Retail and manufacturing continued to shrink in annual terms despite the favorable leap-year effect.

Looking ahead, we expect the economy to grow at 1.0% this year (0.6% in 2023). Falling activity at the margin consolidates our view that monetary easing will continue at the next monetary policy meeting (April 30), with a 50-bp cut. **Full story here.



The monthly GDP proxy increased 2.9% YoY in February (from 1.4% in January), above our forecast of 1.8% and market expectation of 2.1%. We note monthly activity was partly boosted by a favorable base effect, on an annual basis, as social conflicts affected activity in 1Q23. The headline figure was driven by a strong expansion in mining (15.9% YoY in February) and construction (6.4%), while fishing and agricultural sectors fell by 31.3% and 2.0%, respectively. Services continues in recovery mode, increasing 2.4% YoY in February compared to 1.5% in January but still below the 10-year average of 3.2%. Still, momentum remained soft, with the quarterly annual rate of the monthly GDP at 1.0% February. At the margin, the monthly GDP increased 1.2% mom/sa in February, taking the quarter over quarter (non-annualized) growth rate to 0.6% in February (from 0.5% in 4Q23).

Looking ahead, our GDP growth forecast for 2024 stands at 2.5%. While February’s activity figure was above market expectations, momentum remains soft. In this line, the BCRP concerns on activity should not change significatively after this figure, suggesting further easing of the monetary policy stance is likely amid well behaved inflation. However, we note that cuts in the reserve requirement (to ease financial conditions) are more likely than rate cuts in the policy rate given the narrowing of the rate differential with the Fed which could pressure the currency. Our end of year policy rate estimate is at 5.75%, which implies one more rate cut of 25-bp during the rest of the year. **Full story here.  


The Central Bank of Chile increased the limits of investment in alternative assets for Pension Funds, and set a new investment limit in alternative assets for the Individual Unemployment Fund. Alternative assets correspond to a broad spectrum of investment instruments in private markets, including debt and private equity, real estate, infrastructure, among others, which are usually restricted to institutional or qualified investors. The decision to increase the maximum structural limits of investment in alternative assets for Pension Funds will be implemented gradually, in consistent with respective risk profiles of each type of Fund. For example, Fund A will rise from the current 13% limit by 2pp per year to reach 19% by August 2026 and then by 1pp to 20% in 2027. On the opposite spectrum, Fund E will remain at 5% before shifting to 6% in 2026. The decision contributes to the objective of promoting the diversification of the portfolios of the Pension Funds. Additionally, the Individual Unemployment Fund (CIC) will have a maximum investment limit of 3%. As of March, the pension system showed that around 5.5% of AUM (USD 180 billion) were directed to alternative investments. Given that the current restrictions were not significant limits to the current portfolio make-up, we do not expect the decision to have a significant effect on capital flows.


Tomorrow’s Agenda: the trade balance for March will be published. We forecast a USD 1.4 billion surplus for March, up from a deficit of USD 1.1 billion registered in March 2023, mostly due to the recovery of the agricultural exports following last year’s severe drought.