The 2026 election year begins with some certainties. Asset volatility will be high. Future interest rates, the stock market and the dollar will fluctuate based on current events, research and debate. The agricultural year won’t be as good as 2025, but it won’t be bad. There will be a slow but steady decline in interest rates. Inflation will remain within the target range and GDP will experience moderate growth. Abroad, the great uncertainty is the bubble that could burst on the American stock market. As it is an election year, the fiscal pressure will increase and the new Minister of Finance, whoever he is, will not have the strength of Fernando Haddad in the Lula government.
The year that ended yesterday was much better than expected. The stock market increased by 34%. The dollar fell 11%, the biggest drop since 2016. In the real economy, unemployment has seen consecutive record levels. Today, the country has the lowest absolute number of unemployed recorded by the Pnad and the largest number of employed people. Income has increased. Inflation surprised positively. In March, Focus estimated that inflation would end the year at 5.68% and 4.3%. If the March projections were confirmed, it would be a disaster, inflation would have increased compared to the previous year and would have been well above the target ceiling. In the end, it was below the ceiling, within the allowable range. The main explanation for this was the spectacular agricultural harvest. What will the 2026 harvest be, according to the best Brazilian expert, José Roberto Mendonça de Barros?
— It will be difficult to repeat a performance as positive as that of 2025, but it will not be bad. Last year, when the rain came, it was perfect, except in Rio Grande do Sul. The off-season went well and the harvest was spectacular. Agricultural GDP increased by 8-10%. We expected prices to rise by 8.5-9%, and they increased by 2%. It will be difficult to repeat this performance, but there is no chance that it will be the other way around — said Mendonça de Barros.
According to the economist, if January rains are normal, the country may be able to match last year’s agricultural production. Cultivated areas have increased and Rio Grande do Sul is expected to produce more. This would help maintain prices, but not cause them to fall as happened last year.
– In short, there is no reason for agricultural prices to exert strong pressure, unless the weather is really bad, much more than expected — says José Roberto.
Inflation can be affected by the exchange rate, but a strong adjustment is expected in the American stock market in the coming months. According to José Roberto Mendonça de Barros, 90% of the American market believes that there is a bubble in artificial intelligence companies. The bursting of this bubble would devalue the dollar. However, during the second half of the year, the tension of the election period could devalue the real, which would have an impact on inflation.
Brazil has been very successful in resolving the tariff crisis and increasing its exports. The process of market diversification continues, even if there is no agreement with the European Union. This helps stabilize the exchange rate. China’s new meat tax, announced yesterday, could affect sales.
If I had to choose the best news of 2025, I would say it is Brazil’s exit from the hunger map. The announcement was made at the end of July by the Food and Agriculture Organization of the United Nations, FAO. This does not mean that all Brazilians enjoy food security, but by UN measurement the country falls outside of this dismal classification. Those who have forgotten the bone queue, when Brazilians fought over butchers’ leftovers to eat, simply don’t appreciate this fact. This is the result of the pandemic, but also of the lack of effective social policies.
The biggest criticism from economists will remain fiscal policy. The data shows that the 2025 target has been achieved, but this is because 44 billion reais will not be taken into account. However, the debt continues to grow and there is no discount available. The big electoral debate on the economy will focus on the public accounts. The right, when it governed the country, did not have good fiscal results, but lived off a reputation for austerity. The left was not as bad as financial market economists make it out to be, but it has a reputation for spending. Whoever is elected, the country will need a structural adjustment of public accounts in 2027. The right will promise it, even if it does not know how to go about it. The left does not want to promise. And therein lies the danger.
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