Good morning! In this week’s issue: The Senate is set to take center stage in Brazilian politics. Deforestation data becomes new battleground for President Bolsonaro. How markets performed this week. And the main facts of the week.
The week in review
Economy. Brazil’s Central Bank started what could be the first of multiple cuts to the Selic benchmark interest rate, taking it down to 6%. The move aims at making credit cheaper, thus stimulating investments and consumption. Recent unemployment data, which shows a positive downward trend in the number of Brazilians out of a job, could also help break Brazil’s recent vicious cycle of stagnation. However, long-term effects on the economy will only come after reforms of the pension and tax systems pass in Congress.
Trade. Brazil and the U.S. have officially begun negotiating a bilateral trade agreement. The Brazilian government wants to start discussing non-tariff areas, which would be easier to settle as Brazil cannot sign deals on tariffs without having other Mercosur nations on board. Brazil and the U.S. are competitors in several international markets—notably agriculture—which could make reaching consensus difficult.
Energy. Brazil and Paraguay signed a new deal in May on the rights to purchase energy produced...