AGP Executive Report

Trade: New Zealand and Brazil agreed to establish a trade and investment dialogue, aiming to deepen commercial ties and discuss wider trade issues. Two-way trade reached NZ$528 million in the year to March. Corporate Finance: A Rio court approved the end of Americanas’ bankruptcy proceedings, more than three years after an accounting scandal pushed the retailer into court protection. Critical Minerals: Brazil’s minerals sector is drawing R$39 billion in investment, as rare-earth projects attract fresh attention. Labour Costs: Brazil’s Congress approved a constitutional amendment cutting the standard workweek to 40 hours without reducing pay. Businesses warn the change could raise operating costs and inflation. Election Watch: Lula and Flávio Bolsonaro traded accusations in a heated debate ahead of Sunday’s runoff, with fiscal plans and the country’s economic direction in focus. Agriculture: China imported 10.7 million tonnes of Brazilian soybeans in September, down 2.4% year on year, though shipments from Brazil rose 3.4% over the first nine months.

Runoff Watch: Lula and Flávio Bolsonaro traded accusations in their first debate, while polls showed a near tie ahead of Sunday’s vote. The result could shape tax policy and business confidence. Aviation Costs: Airlines warn Brazil’s 2027 consumption-tax reform could lift the sector’s effective ticket tax rate to about 26.5% from 9%, pushing fares higher and passenger numbers lower. Workweek Shift: Congress approved a phased cut to a 40-hour week, with employers given time to reorganize schedules or hire; business groups warn of higher costs. Agriculture Trade: Brazil found Newcastle disease at a turkey farm in Santa Catarina. Sanitary measures will affect 133 farms, and officials are preparing reports for trading partners; any export restrictions remain unclear. Carbon Finance: Google and McKinsey agreed to buy 320,000 tonnes of carbon-removal credits over 10 years, helping fund silvopasture restoration across 8,700 hectares in the Amazon and Cerrado.

Election & Economy: Lula and Flávio Bolsonaro traded personal attacks in their first runoff debate, offering little policy detail as Brazil’s Oct. 25 vote approaches. The close race has investors watching for shifts in fiscal policy and trade ties. Workweek: Congress approved a constitutional amendment to cut the workweek to 40 hours and end the six-day schedule. Businesses and economists warn the change could raise costs and inflation. Trade & Energy: Brazil’s oil sales to China hit a record amid disruption to shipping, while Petrobras revived studies for a floating LNG vessel offshore. Industry: Australian miner Lynas proposed an all-share takeover of Meteoric Resources, which is developing a rare-earth project in Brazil. Agriculture & Climate: A lean coffee harvest could push prices higher. Amazon deforestation, meanwhile, fell to its lowest level since 1988, a boost for the government’s environmental credentials and climate-focused investment.

Election and Markets: Brazil’s Oct. 25 presidential runoff is drawing close market attention, with investors watching how Lula da Silva or Flávio Bolsonaro would handle fiscal policy as voters weigh inflation, purchasing power and work-hour changes. Business and Jobs: Congress has approved a 40-hour workweek, ending the six-day schedule; businesses warn the change could raise operating costs. The government may offer credit lines to help firms manage the impact of tax and labor reforms. Investment: KTM has opened a motorcycle assembly plant in Brazil, adding manufacturing capacity. Energy and Trade: Brazil recorded a surge in oil sales to China amid disruption around the Strait of Hormuz, while Petrobras revived studies for an offshore floating LNG vessel.

Manufacturing: Bajaj Auto-owned KTM opened a R$20 million motorcycle assembly plant in Manaus, with capacity for 20,000 units a year. It plans to build 3,500 by year-end and expand output in 2027. Economic Pulse: Brazil’s economic activity rose 0.3% in August, in line with forecasts, led by a 0.9% monthly gain in industry. The central bank expects growth to slow to 1.8% this year and 1.4% in 2027. Workweek Reform: A constitutional amendment sets a gradual cut in the maximum workweek from 44 to 40 hours, ending the common six-day schedule. Retailers and restaurants warn the change could push up prices. Energy and Exports: Brazil logged record oil sales to China amid shipping disruptions, while Petrobras revived studies for a floating LNG vessel offshore—potentially widening the country’s energy export options.

Labor Costs: Brazil’s Congress approved a constitutional amendment cutting the workweek to 40 hours, with the new schedule due to take effect in two months. Retailers and restaurants warn the change could push up prices. Oil & Energy: Brazil recorded its highest-ever oil sales to China as Middle East shipping disruptions reshaped trade. Petrobras has also revived studies for an offshore floating LNG vessel. Investment: Embraer agreed to buy a 51% stake in India’s Novavayu Aerospace, expanding its international aerospace business. Agribusiness & Trade: Brazil is forecasting a record grain harvest, while the EU-Mercosur trade deal is projected to lift Brazilian exports by 30.7%. The country has opened 700 agricultural markets since 2023. Markets & Infrastructure: Brazil’s economic activity rose 0.3% in August, matching forecasts. Infrastructure auctions could attract R$54 billion after the presidential election, though volatility has surged as the runoff approaches.

Energy: Brazil’s ANP approved studies of a new pre-salt area near the Jubarte field for possible future auctions, adding acreage to upcoming oil rounds. China’s oil purchases are also surging: Brazilian oil sales there reached a record $21.8 billion through September, up 49% year on year. Business Costs: The Senate approved a shorter, five-day workweek with a 40-hour limit and no pay cuts, prompting warnings of higher costs for employers. Finance Minister Dario Durigan said targeted credit lines may help firms adjust to the labor change and 2027 tax reform. Industry: Embraer plans to acquire 51% of Mahindra’s aerospace subsidiary, while Brazil’s August economic activity rose 0.3%, in line with forecasts. Infrastructure: New port and transport projects could attract billions in investment, with infrastructure auctions potentially drawing R$54 billion after the election.

Economic Activity: Brazil’s central-bank index rose 0.3% in August, matching forecasts, with industry up 0.9%. The bank expects growth to slow to 1.8% this year and 1.4% in 2027. Workweek Reform: Congress approved a move toward a 40-hour week without reduced pay, a win for Lula ahead of the runoff. Economists warn the change could raise business costs and inflation. Infrastructure: A new Cedro iron-ore port in Rio de Janeiro secured environmental approval for a R$3.6 billion project, while infrastructure auctions could attract R$54 billion after the election. Industry and Trade: Embraer plans to acquire 51% of Mahindra’s Novavayu Aerospace, expanding its international reach. Brazil’s glassmaker O-I Glass is nearly doubling product launches and plans to double output at its Pernambuco plant next April. Agriculture: Brazil’s beef exports face tighter domestic supply and reduced access to key markets; a USDA forecast expects shipments to fall in 2027.

Labor Costs: Brazil’s Senate approved a constitutional amendment ending the six-day workweek and gradually cutting the maximum from 44 to 40 hours, with two paid days off. The change is a major win for workers, but economists warn it could raise business costs and inflation. Election Economics: With the runoff near, Lula has promised free weekend transit and small-business relief. The spending plans are drawing concern over public finances as voters weigh his economic record against Flávio Bolsonaro’s debt-cutting agenda. Trade and Investment: Brazil-China trade reached a record through September, while the Mercosur-EU deal is being credited with a 30.7% boost to Brazilian exports. Liberty Mutual is also set to acquire insurer Austral Seguradora, and Itaú has taken a 35% stake in Prisma Capital.

Labor Costs: Brazil’s Senate approved a 40-hour workweek with no pay cuts, a major win for Lula before the runoff. Unions welcome the change; businesses warn higher costs could squeeze hiring and push up prices. Growth: Services activity slipped 0.1% in August, missing forecasts and adding to signs that Brazil’s economy is losing momentum. Finance: Independent asset managers now hold 41% of assets under management, up from 32.2% in 2019, as structured funds gain ground. Separately, lawmakers rejected a bank-resolution bill by five votes, delaying rules that could widen support for troubled banks. Trade: Brazil-China trade reached a record through September, while the country has opened 700 agricultural markets since 2023—building export opportunities even as recent reports flag weaker shipments.

Labor Costs: Brazil’s Senate approved a constitutional amendment cutting the maximum workweek from 44 to 40 hours and ending six-day schedules without reducing pay. The change could affect more than 30 million workers, particularly in retail, restaurants and hotels, and is expected to become law next week. Trade and Agriculture: Beef exports fell 35% year on year in September after Brazil filled its China quota and faced higher tariffs, but cattle prices climbed. Separately, a Mercosur-EU trade deal is forecast to lift Brazilian exports by 30.7%, while the country has opened 700 agricultural markets since 2023. Growth and Markets: The IMF forecasts Brazil’s economy will grow 2.2% in 2026. Brazilian stocks have gained 21% in the second half of the year, supported by commodity prices and foreign inflows. Critical Minerals: Brazil’s new critical-minerals law has raised hopes for domestic processing and fertilizer production. Lynas has discussed a rare-earth separation plant in Minas Gerais, but says it has made no commitment.

Trade and Agriculture: Brazil’s exports to the European Union jumped 30.7% from May to September year over year, following the Mercosur-EU agreement’s provisional start. The government also says Brazil has opened 700 overseas markets for agricultural products since 2023. Growth Outlook: The IMF cut its 2026 growth forecast for Brazil to 2.2% from 2.4%, citing high interest rates, reduced fiscal stimulus and global uncertainty. Markets and Election: Investors are shifting positions after Flávio Bolsonaro’s first-round lead, while debt offerings by Brazilian real estate and agribusiness firms have halved. Business and Infrastructure: Aena plans R$1 billion in investments at Rio’s Galeão airport, and President Lula announced R$12.6 billion in debt relief for microentrepreneurs ahead of the runoff.

Election & Markets: Brazil’s runoff is tightening, with polls showing Lula and Flávio Bolsonaro in a technical tie. Investors have rushed into Brazilian assets since Bolsonaro’s first-round lead, while the government’s fuel-tax cuts and inflation at 4.58% keep fiscal and interest-rate policy in focus. Investment & Industry: ICTSI has taken full control of Brazilian tracking firm iTracker, and venture investor Yield Lab has launched a Brazil-focused fund. Embraer is also advancing an aerospace joint venture with India’s Mahindra. Infrastructure & Finance: Bond issuance is expected to slow as persistent inflation limits hopes for Selic cuts. The data-center boom is also prompting state-level regulation, while electricity-market liberalization raises credit and liquidity concerns. Agribusiness: Brazil’s largest dairy farm is betting on animal welfare and genetics to expand, even as rising soybean planting weighs on grain-market sentiment.

Data Center Investment: Brazil’s data-center boom is drawing tougher state scrutiny: eight of 16 bills introduced this year would add restrictions, including on water use, environmental licensing and transparency. Election and Business: Companies see potential for lower interest rates and closer U.S. ties under runoff challenger Flávio Bolsonaro, but worry about industrial policy and trade with China, Brazil’s biggest trading partner. Rates and Prices: Brazil’s September inflation reached 4.58% year over year; a recent analysis argues the 13.75% benchmark rate is far too high and weighs heavily on the economy. The government has also cut fuel taxes ahead of the runoff. Trade and Industry: Embraer plans to take a 51% stake in Mahindra’s aerospace arm to form a joint venture, while AD Ports completed its $835 million acquisition of Brazilian port operator CLI.

Growth Outlook: The IMF cut Latin America’s 2026 growth forecast to 2.3% and its 2027 estimate to 2.5%, citing higher energy costs and little boost from AI. Fuel Policy: Brazil cut fuel taxes ahead of the Oct. 25 presidential runoff. Critical Minerals: Lynas is proposing a rare-earth separation plant in Minas Gerais after agreeing to acquire Meteoric Resources, but funding and regulatory approvals remain outstanding. Aerospace: Embraer plans to take a 51% stake in Mahindra’s aerospace business, forming a joint venture. Inflation: Brazil’s September inflation rose 0.82% for the month, bringing the annual rate to 4.58%.

Clean Mobility: Brazilian electric-motorcycle startup Vammo says it has reached EBITDA profitability, passed 10 million battery swaps and grown to more than 10,000 active riders. It plans to expand from São Paulo into Campinas. Consumer & Tech: MercadoLibre’s second-quarter revenue and financial income rose 50% to $10.2 billion, but operating income fell 17% as it reinvested in growth. Brazilian beer brand Brahma’s value climbed 65% to $1.9 billion, the biggest gain in a global ranking. Prices & Trade: Brazil’s September inflation reached 4.58% year over year, while the country posted a $7.74 billion trade surplus. With the presidential runoff approaching, investors are also weighing potential shifts in economic policy. Investment Outlook: Indosuez Wealth Management is bullish on Latin American commodities, particularly copper, citing demand from AI, technology and renewable energy.