One candle for God; another for the devil

BRAZIL ECONOMICS - Report 20 Jul 2026 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

High-frequency data show a slowdown in economic activity in the second quarter, although some sectors remain resilient. This outcome is consistent with the current scenario, which combines restrictive monetary policy with fiscal, parafiscal and credit stimuli moving in the opposite direction. Much of the stimulus measures should only come into operation in the second half of the year, and their effects should still show up in the next data releases. In industry, the result has been driven by the extractive sector, while manufacturing in general continues to post modest performance.

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