The predicted volatility of the Brazilian economy in 2026, the year of the presidential election, is leading Vinland Capital to seek a flexible and globally diversified management structure to navigate the turbulence and capture value, both in Brazil and abroad. This is according to José Monforte , a partner at the asset management firm, which has R$ 15 billion under management.
“The recommended investment strategy for 2026 is not one of paralysis, but of seeking asymmetries with a margin of safety, such as betting on a more intense interest rate cycle in the country than that priced in by the market,” says Monforte, in an interview with NeoFeed , in which he analyzes the national and international economic scenario projected for next year.
According to him, Brazil's electoral uncertainty in 2026 tends to affect risk perception and asset prices, with the fiscal issue being a topic that will likely only be addressed after the election results.
In this sense, Vinland sees the start of the Central Bank's interest rate cutting cycle as the main point of attention in the first half of the year. Although the improvement in inflation paves the way for a cut in the Selic rate, the medium-term trajectory is conditioned by two major factors of uncertainty: the serious fiscal imbalance and the 2026 presidential election, which is projected to be highly polarized and volatile.
"The market is pricing in a smaller interest rate cut, to around 13%, than the real potential, between 11.5% and 12%, given the volatility of the election scenario. Therefore, the strategy is not to be conservative, but to seek investments with 'fat' and asymmetries, where the price of an asset differs from its intrinsic value."
This projected volatility for the Brazilian economy in 2026 demands flexibility and global diversification, according to the manager.
“We are preparing for this volatile scenario in the country with a strengthened team and the flexibility to allocate capital globally,” he continues, citing Mexico and Hungary as examples. “We will seek the best opportunities wherever they arise, ensuring resilience should the Brazilian scenario deteriorate.”
Vinland's outlook for 2026 is for controlled inflation and moderate GDP growth, around 2%. The country's biggest challenge, he warns, is the fiscal imbalance, with excessive spending making the scenario unsustainable in the medium term.
“Brazil lives on the edge of a perpetual precipice,” says Monforte. “It doesn’t jump because Congress won’t let it, but it also doesn’t back away because, if there’s money left over, there’s always someone wanting to spend it.” Because of this, according to him, the country is the “eternal straight-A student,” never to become a Switzerland or a Venezuela. “The country doesn’t get off this tortuous and risky path,” he says.
The polarized political landscape in a presidential election year exacerbates the situation. According to the Vinland partner, a significant portion of the electorate is dissatisfied with the current government, ensuring that the opposition will be competitive in the presidential election.
"Historically, this combination of low inflation and low unemployment should have made President Lula a highly popular figure, but that's not what we're seeing," he says.
Monforte attributes the president's low popularity to the effects of fiscal imbalance, such as high interest rates. Even so, he doesn't believe the opposition candidates will address the issue in depth.
“Only those who say they will lower the condo fees win the election for building manager in my building,” he says. “The candidate who says they will raise the condo fees has never won the election, that’s the truth of society,” he adds, referring to the likely absence of sacrifices, such as promises to cut spending or reduce the public deficit, on the part of the candidates.
That's why, regardless of who wins the presidential election, fiscal discipline is not guaranteed. "What will define the economic trajectory will be the political action after the election, not the identity of the winner," he states. "A proactive post-election approach would allow for more aggressive interest rate cuts, while a reactive approach will lead to a future crisis, with currency devaluation and high inflation, forcing belated action."
Globally, Monforte says that the prospect of interest rate cuts by the Federal Reserve (Fed, the central bank of the United States) creates a favorable environment for emerging countries. The expectation is that the Fed will continue to reduce interest rates, with confidence that they should stabilize between 2.5% and 3%. Vinland predicts at least two cuts next year, bringing the rate close to 3%.
“The inflationary impact of tariffs in the US was less than expected and is gradually being removed from price formation,” says the executive. Although there is no evidence of a recession, risks such as private credit and a possible AI bubble deserve attention.
According to him, concern about the political uncertainty caused by President Donald Trump's erratic actions is seen as a known factor already priced into the market. "Trump's actions, often motivated by electoral goals, are considered fleeting, and he tends to back away from policies that don't work," he opines.
Therefore, a scenario of lower interest rates in the US, in isolation, is positive for Brazil, making the global environment less challenging. But Monforte advocates caution regarding the potential interest of foreign investors in the country.
“Political and fiscal uncertainty tends to deter foreign investors, who demand a higher risk premium,” he warns. “High exchange rate volatility due to the presidential election also diminishes the appeal of carry trade, despite the interest rate differential.”
