We have covered Brazil for the past 17 years. This January we launched our newly revamped Brazil Politics & Security publication, which is written by our in-country expert, reviewed and edited in-house, and sent out fortnightly. To recieve your free sample copy just fill out the form below:

The Forecast, 2018

The below is a summary of The Forcast: Brazil 2018. If you would like to download the full document for free, just click the button below:

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Domestic politics and policy
Views as to the success or failure of President Michel Temer’s administration hinge heavily on his ability to secure congressional approval of the flagship reform of public sector pensions. Even in its watered down state, winning approval for this key fiscal reform will ease budgetary pressures and set the tone for a much more positive outlook in 2018.

However, approval is not guaranteed and two scenarios are possible:

  1. The first would see Temer winning approval for the reform and support for the administration-backed candidate — probably either Geraldo Alckmin or Henrique Meirelles — growing in response to an improving economy and falling unemployment.
  2. The second scenario would see the coalition losing cohesiveness with elections approaching, failing to pass the pension reform, and possibly backing different candidates. Failure to secure structural reforms would step up the pressure to carry out privatisations and offer private sector concessions.
The security situation in Rio de Janeiro looks unlikely to improve in 2018. Policing budgets have been undermined by the state’s economic problems and the crisis of governability with so many former leaders now in jail.

A clutch of legislative proposals on public security in different stages of analysis by Senate committees are piecemeal in nature. At best, they will strengthen the hands of the security forces when it comes to detentions, with the loss of some privileges for younger offenders.

There have been a growing number of incidents where innocent bystanders have been killed in the crossfire between gangs and police. With Governor Luiz Fernando Pezão and Mayor Marcelo Crivella offering little in the way of ideas on how to use resources more effectively, the best that Rio de Janeiro can do is to reverse the problem of rising crime by improving the local economy, offering more jobs for young people, and the emergence of a more effective governor as a result of the 2018 elections.

International Affairs
Brazil has become more closely aligned with its Mercosur partners since the shift toward centre-right policies across most of the South American region. The country is sticking to its pragmatic and non-confrontational tradition. President Michel Temer maintains good working relations with left-leaning leaders in Bolivia and Ecuador and shows little appetite for taking a more proactive stance against President Nicolas Maduro’s socialist administration in Venezuela.

Brazil’s economic ties with China have strengthened considerably over the last two years, and Chinese companies are showing a keen appetite for Brazilian assets in the power sector and for infrastructure as a whole. Bilateral relations are good. There has been little visible engagement with the U.S. since President Donald Trump took power, but there are no areas of serious dispute.

Key economic indicators are improving with: inflation under control; interest rates at a record low; and even industrial output is starting to recover. Forecasts point to economic growth of less than 1% in 2017 strengthening to around 2.5% in 2018. Interest rates were cut to 7% recently, which is a record low for Brazil, and central bank forecasts suggest inflation will be on target at 4.5% at the end of 2017.
Energy Sector

Rights Transfer

Petrobras expects to receive billions of dollars when it renegotiates the monetary terms of a 2010 rights transfer granted by the Federal Government of the day. This oil-for-shares scheme allowed Petrobras to produce and market up to five billion barrels of pre-salt crude in return for the FG’s participation in the company’s 2010 partial stock market floatation.

Some government officials have acknowledged that an adjustment for the fall in oil prices will require some additional remuneration for Petrobras, but a backdrop of fiscal austerity and demands to help cash-strapped states — like Rio de Janeiro, Rio Grande do Sul, and Amapá — may make this a hard sell for the federal government.

Licensing Rounds

The government has announced which areas will be put on offer for 15th round of E&P concessions and the 4th pre-salt round scheduled, respectively, for 29 March and 7 June 2018. The 15th E&P round will include 70 blocks of which 49 are offshore Ceará, Potiguar, Sergipe-Alagoas, Campos and Santos, including two adjacent to Saturno.

The onshore areas on offer include 21 offshore areas Parana and Parnaíba. These onshore areas were the subject of recent University of São Paulo studies and are seen as having high potential for shale gas.

Other industry


Brazil’s legislators put forward a list of 57 major state infrastructure assets that will be put up for privatisation, giving investors access to these strategic sectors for the first time in decades. Chinese investment in the Brazilian infrastructure, communications and energy sectors — up 70% in 2017 to US 20 billion — is expected to continue to grow.


Brazil’s plans to privatise the Eletrobras power utility will be the major business event of 2018. It should be concluded by mid-year and will end FG control but many details remain to be filled in. Mines & Energy Minister Fernando Coelho Filho has forecast that the Eletrobras’ privatisation could raise up to R$20 billion (US$6.2 billion). The FG will retain a golden share and reserve the right to veto some strategic decisions.

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