Companies predict lower growth and even recession for 2027, with high interest rates and defaults

According to a survey carried out by Folha de S.Paulo with the 76 companies listed in the Stock Exchange index, some of them expect the economy to grow less next year and that high interest rates will affect operations even more compared to 2026. The data takes into account the content of earnings conference calls from the second quarter of this year.

The increase in family debt has even impacted basic bills, such as water and electricity. Companies in the sector, such as CPFL Energia and Copasa, have intensified the cut in service supply.

"There is a challenge in paying energy bills, which reflects, in the last line, the increase in our default", pointed out Gustavo Estrela, CEO of CPFL Energia, when commenting on the increase in the indicator: from 0.82%, in the second quarter of 2025, to 1.08% this year. "Our main tool for controlling default is cut-off actions," he stated.

For Copasa, which also classifies the level of household debt as challenging, the strategy has also been to adopt early collection mechanisms and "change the negotiation rules", stated the CEO, Cleyson Jacomini.

"In addition to electronic payments, such as Google Pay and Apple Pay, we are working to expand the form of execution and increase surveillance and collection action, with cuts in the case of default, to reverse this trend."

The scenario, according to Marcelo Kfoury, economics professor at Insper, shows how high debt becomes a snowball even amid historic lows in unemployment.

"Someone starts paying a special check, revolving credit card, and is unable to pay the bills they have. The person receives R$2,000 a month, pays R$1,000 in installments, and the rest is left over for food, and there is no left over to pay for energy or water. They choose what they pay for", says Kfoury.

In the retail sector, Lojas Renner and Assaí speak of pressure on consumption due to the Selic (base interest rate) being higher than expected. CPFL Energia and Copasa, which provide basic services, mention defaults on water and electricity bills due to record household debt.

Alfredo Setubal, CEO of the holding company Itaúsa, even spoke of a "small recession", echoing Armínio Fraga, economist and former president of the Central Bank, at the beginning of the month. The holding groups companies from different sectors, such as banks (Itaú Unibanco), footwear (Alpargatas), road concessions (Motiva) and sanitation (Aegea).

According to the executive, the economy has slowed down "despite all the incentives that the government has given to increase consumption and debt renegotiations."

"This will be reflected in lower consumption by families, who already have a very high level of debt. We are guiding the invested companies to have a more moderate and more cautious budget as well," he said.

The banking sector also gave warning signals when publishing results. BTG Pactual and Santander indicated that the more complex environment of 2027 is becoming a consensus in the market, with credit default as the main point of attention.

"The most challenging scenario for 2027 is becoming a consensus. The level of government and household debt is very high, the interest rate is very high, and there will come a time when all of this will impact the economy", stated Roberto Sallouti, CEO of BTG Pactual.

In this week's Focus Bulletin projections, the Selic will end 2027 at 12% per year, and the GDP will grow at 1.5%. For 2026, the experts consulted continue to see an expansion of 1.98%.

Retail companies also indicated caution. Assaí Atacadista sees a “consumption pressure scenario” that is likely to last and has readjusted its route in light of the high Selic.

"The company is very focused on deleveraging, so we reduced investment levels and held back a series of projects [due to the high Selic]", said Belmiro de Figueiredo Gomes, CEO of the group.

He stated that the new business model to be expanded will be one that includes pharmacies and even charging stations in the units.

Yduqs, an education company, also projects that the 2027 scenario will be challenging, "very similar to what was in 2026" from a macroeconomic perspective, with "very tight income" and high debt.

The company's outlook, however, is positive for the educational sector, as next year will not be marked by events that distract consumption or generate uncertainty, such as the World Cup and the presidential elections.

SELIC IN THE HEIGHTS

The executives' caution is related to the shorter-than-expected fall cycle of the Selic rate. Today, at 14% per year, the basic interest rate has operated in double digits since the beginning of 2022, to bring inflation to the Central Bank's target of 3%. Until the beginning of the year, the projection was that the rate would fall more quickly, and some managers even speculated that interest rates would reach "at least" 11% by the end of 2026.

But the war in Iran and the subsequent shock in the oil market quickly rebalanced projections on the IPCA (Broad Consumer Price Index), due to higher fuel prices.

The Lula (PT) government's incentives in an election year did not help to lower the Selic rate either: by offering alternatives for taking out credit, the Executive keeps consumption heated, putting pressure on inflation.

Brazilians remain heavily in debt. According to the CNC (National Confederation of Commerce), household debt reached a record 82% in July. Of this total, around 30% are in default and 12% declare that they are unable to pay what they owe.

As Folha showed, this scenario could lead to a loss of consumption pace in 2027, in a rebound effect that, for economists, entails the risk of a stronger than expected slowdown in economic activity. For companies, the effect is on all ends: it becomes more difficult to finance operations and generate revenue from consumers who have deep pockets.