Brazil is facing a complex moment marked by economic pressures, political realignments, and growing institutional tensions. The escalation of conflict in the Middle East has driven up diesel prices, impacting logistics, agricultural production costs, and potentially food inflation, while the government attempts to contain these effects through tax relief and regulatory measures. At the same time, public perception of the economy has deteriorated, with increasing pessimism about inflation, unemployment, and personal finances. This economic backdrop intersects with a broader crisis of confidence, as trust in key institutions—such as the Supreme Federal Court, Congress, and political parties—continues to decline. On the political front, the anticipated departure of Finance Minister Fernando Haddad to run for governor of São Paulo, and debates over reducing the workweek signal an environment of electoral repositioning ahead of 2026. Simultaneously, controversies involving the judiciary and ongoing investigations, including the case related to Lulinha and alleged irregular financial transactions, add further strain to an already complex and sensitive national landscape.
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Economic Situation
Brazilians’ perception of the country’s economic situation has deteriorated in recent months, partially reversing the improvement observed at the end of 2025, according to a Datafolha poll. The survey shows a rise in pessimism regarding both the broader economy and personal financial conditions, with more respondents expecting increases in unemployment—despite it being at historically low levels—and inflation. The proportion of those who believe the country’s economic situation has worsened rose from 41% in December to 46% in March. Meanwhile, the share of respondents who believe the economy has improved declined from 29% to 24%. Haddad is expected to leave his position next week to run for governor of São Paulo, adding a political dimension to the economic debate.
Diesel Price Increase
The escalation of the war in the Middle East has led key sectors of the Brazilian economy to request emergency measures from the federal government to mitigate economic and logistical impacts already affecting multiple supply chains. Finance Minister Fernando Haddad was contacted this week by the Brazilian Confederation of Agriculture and Livestock (CNA) and the Brazilian Association of Animal Protein (ABPA), which detailed the consequences for their sectors and presented a list of demands. According to the CNA, urea—one of the main nitrogen-based fertilizers—has increased by approximately 35% since the beginning of the conflict, raising production costs in agriculture and putting additional pressure on food prices. In parallel, the federal government announced on Wednesday (18), at the Ministry of Transport, a package of measures aimed at tightening oversight of the minimum freight rate and penalizing companies that fail to comply, to prevent a new truckers’ strike amid rising diesel prices. The measures include the immediate suspension of registration for non-compliant companies, revocation of registration in cases of repeated violations, public disclosure of offending companies, and continuous monitoring of repeat offenders. According to ministry officials, current oversight has been insufficient, allowing companies to operate below the minimum freight rate. Petrobras also announced on Friday (13) an increase of R$ 0.38 per liter in diesel prices at refineries, exceeding the R$ 0.32 per liter tax relief granted by the government, resulting in a net increase of R$ 0.06 per liter passed on to distributors.
Trust in Institutions
Brazil is experiencing a period of widespread distrust in its main institutions, with public confidence declining in seven of the eight institutions evaluated by Datafolha between December 2024 and March 2026. According to the survey, skepticism has become generalized, affecting not only the Supreme Federal Court (STF) and the Judiciary—both of which reached record levels of distrust—but also the Legislative branch, the Presidency, the press, and the Armed Forces. Political parties continue to rank as the least trusted institutions, with 52% of respondents stating they have no trust in them, a figure that remains relatively stable compared to previous surveys. The National Congress reflects this broader dissatisfaction, with 45% of Brazilians declaring they do not trust the institution, while only 5% say they trust it greatly, a sharp decline from 11% in 2024. These figures indicate a deepening institutional credibility crisis across multiple sectors of public life.
STF
Minister Dias Toffoli of the Supreme Federal Court (STF) is expected to recuse himself from all proceedings related to the Banco Master case to avoid potential conflicts of interest, after business dealings involving a company linked to his family and a fund connected to banker Daniel Vorcaro came to light. At the same time, public opinion reflects growing concern over judicial impartiality: according to a Datafolha survey released on Wednesday (11), 79% of Brazilians consider it unacceptable for STF justices to rule on cases involving clients of their relatives, even if those relatives are not directly involved in the defense. Only 16% see this as acceptable. In parallel, STF President Edson Fachin publicly emphasized the need for judges to maintain a “healthy distance” from the parties involved and has been working internally to manage the institutional impact of the Banco Master case. He has held discussions with Justice André Mendonça, the case’s rapporteur, and resumed debates on the court’s code of ethics with Justice Cármen Lúcia as part of efforts to address the ongoing crisis.
End of the 6×1 Work Schedule
A majority of Brazilians support ending the 6×1 work schedule—a labor model involving six consecutive working days followed by one day off—which is currently under debate in the National Congress, according to a Datafolha poll. The survey shows that 71% of respondents favor reducing the maximum number of working days per week, while 27% oppose the change and 3% did not express an opinion. The measure, supported by Lula’s government should be one of the main points debated in this year’s election.
Lulinha Case
Businessman Fábio Luís Lula da Silva, known as Lulinha and son of President Lula, has informed Supreme Court Justice André Mendonça that he is willing to return to Brazil to testify in the investigation into alleged irregularities involving deductions from the National Institute of Social Security (INSS). Currently residing in Spain, he communicated his decision through his lawyer, Marco Aurélio de Carvalho, who argues that this willingness to cooperate eliminates any risk of pretrial detention. Lulinha’s defense maintains that a company he opened in Madrid in January 2026 is legitimate but not yet operational and declined to provide details about his economic activities abroad, citing privacy concerns. According to confidential financial data obtained by the Federal Police and shared with a Parliamentary Commission of Inquiry (CPI), Lulinha received approximately R$ 9.7 million and transferred a similar amount over a four-year period, totaling R$ 19.5 million in transactions. The investigation also examines allegations that lobbyist Antonio Carlos Camilo Antunes, known as “Careca do INSS,” may have transferred funds to Lulinha through businesswoman Roberta Luchsinger, who is reportedly connected to his family.
Analysis:
Brazil is entering a period in which economic fragility and political uncertainty are reinforcing one another, creating a challenging environment for governance ahead of 2026. The deterioration in public perceptions of the economy, even amid relatively stable macroeconomic indicators, reflects the weight of inflation expectations and cost-of-living pressures on household sentiment. Rising diesel prices, driven by external geopolitical shocks, have a particularly broad impact given Brazil’s dependence on road transport, affecting supply chains, agricultural costs, and ultimately food prices.
At the same time, electoral dynamics are beginning to reshape institutional behavior and political priorities. The anticipated departure of key figures such as the finance minister signals an early transition into campaign mode. Labor debates, such as the proposal to end the 6×1 work schedule, illustrate how social policy is increasingly framed through an electoral lens, with strong public support but significant resistance from business and political actors concerned about economic impacts.
Overlaying these dynamics is a broader crisis of institutional trust, which has the potential to amplify political instability. Declining confidence in the judiciary, legislature, and political parties suggests a more skeptical electorate that may be less receptive to official narratives and more reactive to controversies. Ongoing investigations involving prominent figures, including cases connected to financial irregularities and alleged influence networks, further strain perceptions of accountability and impartiality. When judicial proceedings intersect with politically sensitive actors, they risk deepening polarization and reinforcing narratives of institutional bias.
Sources: A Folha de SP [1], [2], [3], [4], [5], [6], [7], [8], [9], [10], [11], [12], [13], [14]; Valor Econômico; G1.
