For the third consecutive election, Brazil is once again debating two competing visions for the country that, at their core, have been familiar since 2018. On one side, the Workers’ Party (PT) continues to see the state as a key driver of economic development. On the other, the Bolsonaro camp advocates a smaller state and a greater role for the private sector. The slogans and circumstances change, but the core of the debate remains largely the same.
Just 10 of the most relevant companies among the so-called hyperscalers in the United States are set to invest close to a total of USD 1 trillion in 2026, up from a mere USD 100 billion in 2020 (chart 1).
Markets appear increasingly uneasy about the impact of hyperscalers’ outsized demand for resources on long-term interest rates. The challenge seems more significant in the United States than in Asia. It is also important to pay attention to mounting pressures on land and energy. See Pezco Economics’ report on the macroeconomic impact of AI in Taiwan, South Korea, Singapore, Ireland, and the Netherlands.
In this report we present assessments and outlooks for the economies of Argentina, Colombia, Chile, Mexico, Paraguay and Peru. For a financial market that is mostly focused on developed economies and AI themes, some diversification into Latin American emerging markets looks like a potentially interesting alternative.
Import prices fell 0.4% in July (after -0.3% in June) but are up 5.9% over 12 months. The monthly decline came from fuel (-7.2%, the largest since May 2025; +25.2% over 12 months); excluding fuel, import prices rose 0.4% on the month and are accelerating to 4.5% over 12 months, suggesting persistent pressure from tariff policy
Macroeconomic cycles represent the natural oscillations of economic activity over time. Each phase of the macroeconomic cycle is characterized by a distinct combination of growth, inflation, and economic policy.
A persistently expansionary fiscal stance, a tighter output gap, and, above all, a monetary policy framework characterized by lower credibility help explain why 10-year inflation expectations have risen more sharply and remained more persistent in Brazil than in the United States.
The arithmetic is straightforward. The politics are not. The adjustment required to stabilize public debt is substantial. The most frequently discussed proposals in Brazil's fiscal debate are well known and have been debated by governments across the political spectrum, underscoring the difficulty of translating technical solutions into political reality.
The promise of a more meaningful reduction in public-sector financing needs through spending cuts remained largely unfulfilled. The primary deficit (excluding interest payments) declined from 3.2% of GDP at the end of the Biden administration to 2.7% in 2025 and likely 2.5% in 2026, but this does not appear sufficient to alter the trajectory of the overall fiscal deficit. Moreover, the adjustment has been driven more by higher revenues than by lower spending.
by Tatiana Pinheiro.
The May IPCA report suggests that the disinflation process observed in the second half of 2025 has come to an end. Inflation rose by 0.58% month-over-month and 4.72% year-over-year.
