Business · Economy · 7 hrs ago
High interest rates may block Brazil’s investment growth target
Brazil’s investment rate is just under 17% of the economy, and President Luiz Inácio Lula da Silva has said he wants to raise it to 20%.
The target was discussed in a recent speech focused on economic development through investment.
Analyst Thaís Herédia says high interest rates are a major obstacle to reaching it.
Brazil’s benchmark Selic rate is 13.75% a year, making it more expensive for businesses and others to borrow money for investment.
Brazil last reached a 20% investment rate in 2013, when the Selic was lower and the state development bank provided about 500 billion reais in financing.
Herédia argues that Lula’s approach and delayed fiscal adjustment could keep interest rates higher for longer.
The analysis does not specify what policy changes will follow.
CNN Brasil analyst Thaís Herédia said Brazil’s high interest rates could prevent investment from reaching President Luiz Inácio Lula da Silva’s target of 20% of the economy.
Brazil’s investment rate is currently a little below 17%, while the Selic benchmark rate is 13.75% a year.
Herédia said high borrowing costs make capital more expensive and hinder new investment.
She said the 20% target was reached in 2013, when the Selic was lower and public development bank BNDES provided about R$500 billion for investment.
Herédia also argued that delaying fiscal adjustment could keep interest rates higher for longer.
- Who
- CNN Brasil analyst Thaís Herédia assessed Lula’s investment goal.
- What
- Herédia said high interest rates may make it difficult to raise Brazil’s investment rate to 20% of the economy.
- When
- Herédia discussed the issue on Monday, November 9; the article was published November 10, 2026.
- Where
- Brazil.
- Why
- Herédia said the Selic rate makes capital more expensive, while delayed fiscal adjustment could keep rates high.
Lula’s investment-growth approach
Thaís Herédia’s assessment
Investment target
Lula’s investment-growth approach
Lula’s stated commitment is to raise the investment rate to 20% a year.
Thaís Herédia’s assessment
Herédia said the target is unlikely to be reached under current borrowing costs.
How to promote growth
Lula’s investment-growth approach
Lula’s remarks focused on economic development through investment.
Thaís Herédia’s assessment
Herédia said investment growth would not happen automatically and that high capital costs are an obstacle.
Economic policy
Lula’s investment-growth approach
Lula’s approach was presented as supporting growth through investment.
Thaís Herédia’s assessment
Herédia said delaying fiscal adjustment could lead to higher interest rates for longer.
Brazil reached an investment rate of 20% while the Selic was 7.25% and ended the year at 10%.
Lula addressed fiscal responsibility and economic development through investment in a speech.
Herédia discussed Lula’s investment target during the seventh edition of WW Talks.
CNN Brasil published Herédia’s analysis.
- Investment target
- 20% of the economy per year
- Current investment rate
- A little below 17%
- Selic rate
- 13.75% a year
- Investment rate reached
- 20% in 2013
- BNDES funding cited for 2013
- About R$500 billion
What people are saying
Today, this growth in the rate will not happen by magic.
This phrase, taken out of context, is beautiful, but it will not happen with the cost of capital we have.
The commitment is to take the investment rate to 20% a year. Currently, the rate is a little below 17%. It is an enormous challenge for Brazil to reach 20%.
He will drag out the fiscal adjustment, and the result of that is living with higher interest rates for longer.