Core Insights - Moody's Brazil General Manager Carlos Prates highlighted the persistent issue of rigid fiscal spending in Brazil, emphasizing the need for structural reforms to avoid a "fiscally constrained state" [1] - Prates pointed out that Brazil must improve the control of income and expenditure, focusing on reforming the public finance system to allow for better allocation of resources and reduction of mandatory spending [1] - He mentioned that discussions on unpopular topics, such as spending cuts, are necessary in Congress, as these measures, despite short-term controversies, will ultimately benefit the public [1] Economic Outlook - Prates indicated that with stabilizing inflation expectations and an upcoming downward trend in interest rates, the overall risk profile for businesses is improving, although fiscal issues remain a core constraint on Brazil's credit rating [1] - He noted that while Brazil's economic size and diversity are advantages, fiscal problems continue to weigh down the overall rating [1] Trade Relations - Regarding the recent increase in U.S. tariffs on certain Brazilian products, Prates assessed the actual impact as limited, given that exports to the U.S. account for only about 12% of Brazil's total exports [1] - However, he cautioned that uncertainty itself poses the main risk to the investment environment [1] Clean Energy and Investment - Prates mentioned Brazil's advantages in clean energy and the need to attract investments in emerging industries like data centers, while addressing high import taxes and legal uncertainties as obstacles [2] - He warned that without long-term investment and reforms, Brazil's economic growth may continue to experience "chicken flight" short-cycle fluctuations [2]