A new political landscape impacts Brazil’s Outlook

FrontierView recently hosted a group of leading multinational executives in charge of Brazil operations for both B2B and B2C companies. The discussion centered around the 2023 political and macroeconomic outlook of the country. Specifically, the new political landscape amid President Lula’s first few months in office and the key global and domestic factors poised to impact demand in various industries.

Executives react to Brazil’s new fiscal rule:

  • Whilst Brazil remains a market with ample opportunity, there is widespread concern about sustaining demand in an environment of lower economic growth (0.7% YOY GDP growth for 2023).
    • The impending changes to Brazil’s spending cap and the country’s upcoming tax reform are key regulatory uncertainties that could undermine companies’ ability to deliver aggressive commercial targets and sustain operating margins.
  • Brazil’s tax reform, which aims to simplify Brazil’s convoluted taxes on consumption, remains key to igniting long-term growth.
    • If approved, it will represent an increased tax burden for a few sectors, notably healthcare, logistics, and IT & Telecom.
    • When probed about their ability to influence tax policy changes, executives had limited confidence that they could influence the direction of tax changes and advocate for their industries within Congressional committees.
  • Brazil GMs are coming to terms with a reality where they will have to compete more aggressively for market share in order to sustain top-line growth, after more than two years of consistent price increases.
    • B2C companies will have to contend with consumers with deteriorated household finances, while corporate investment will moderate amid higher global uncertainty and elevated interest rates.

FrontierView solutions:

  • By utilizing FronterView’s market monitoring services, firms can quickly become aware of shifting government priorities – particularly on the impending tax and federal budget changes – allowing for quick course correction to mitigate risks and development of medium to long-term scenarios.
  • FrontierView can also offer additional granularity across different industry segments allowing companies to identify opportunities, capitalize on newfound trends, and adopt a more targeted approach to industry prioritization. More importantly, FrontierView is a data-driven market intelligence company, allowing you to plug in our economic and industrial forecasts into your own demand planning models.
  • FrontierView clients can also request personalized briefings with research experts to clarify pressing issues and pressure test assumptions during quarterly business review meetings and strategic planning sessions.

Related content:

Download an executive summary of the key highlights discussed during our Brazil Executive Roundtable

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