A Conversation with BTG Chairman, André Esteves | Global Investors' Symposium São Paulo 2025

Global Market Dynamics

• The primary driver of current global market volatility is the United States, shifting from a narrative of "American exceptionalism" to one of uncertainty due to the new administration's style, tariffs, and regulatory visions.
• Global portfolios are diversifying away from hyper-concentration in the US and the dollar, resulting in significant moves in the Euro, Brazilian real, and emerging markets.
• A "K-shaped" economic divergence exists where the AI-linked technology sector thrives while the traditional economy underperforms, evidenced by US stock market gains being driven primarily by only seven high-performing tech stocks.

Artificial Intelligence Investment and Risks

• AI-related capital expenditure (CAPEX) is projected to reach approximately $350 billion this year, a volume comparable to the total US government support during the COVID-19 pandemic ($400 billion).
• The AI business model is shifting from low-capex, high-scalability tech to an industrial model requiring significant infrastructure investment, creating uncertainty regarding potential valuation excesses.
• Productivity gains from AI are expected to be global, offering Brazil opportunities to capture efficiency gains despite lacking the vocation to manufacture chips or lead hardware design.

Geopolitical Strategy and Brazil's Position

• The global framework is moving toward a less multilateral, more polarized system driven by US questioning of post-war institutions and the rise of China as a peer power.
• Brazil is positioned as a "winner" in this shift due to its status as a friendly, neutral nation with strong relations across major geopolitical blocs.
• Brazil holds significant geopolitical leverage as a provider of 80% of the global food production growth over the next 20 years.
• Brazil's competitive advantage for hosting global infrastructure, specifically data centers, relies on an energy matrix that is 85% clean with generation costs significantly lower than competitors like the US or Europe.
• Regulatory reforms, including the PEC/PL for data centers and potential updates to data protection laws, are being utilized to accelerate Brazil's role as a data hub.

Economic Policy and Fiscal Outlook

• Brazilian economic performance suffers from a lack of coordination between fiscal and monetary policy, described as driving with one foot on the accelerator and one on the brake.
• The benchmark interest rate of 15% is viewed by the speaker as unsustainably high and is expected to begin a gradual decline starting in January, potentially falling to between 7% and 11% depending on future fiscal policy.
• A fiscal adjustment of approximately 2% of GDP is deemed necessary and achievable to address high government spending.
• Specific fiscal inefficiencies cited include the automatic annual real adjustment of the minimum wage during a period of zero unemployment and an automatic 2.5% productivity-linked gain for retirees.
• Recommendations include restructuring social protection programs (referencing the "Family Bank" concept) to reduce dependency on low-productivity state aid and push recipients toward the formal labor market.

Development Priorities

• The three fundamental priorities for Brazil's next decade are identified as:
  • Macro: Fiscal responsibility and debt sustainability.
  • Micro: A pro-business agenda focused on simplicity, reduced bureaucracy, and fewer licensing hurdles.
  • Capital Markets: Leveraging the deep capital market to fund infrastructure, replacing reliance on government development banks like BNDES.
• Success is framed as entirely dependent on domestic policy choices rather than external geopolitical luck.