Brazil’s public sector posted a consolidated deficit of R$56.1 billion in May, a 66 per cent increase on the same month a year earlier, pushing the 12-month shortfall to R$149 billion, or 1.14 per cent of GDP. The gross government debt ratio climbed to 81.1 per cent of GDP, its highest in five years. The immediate market signal came when a Treasury auction of IPCA+ inflation-linked bonds failed to attract sufficient demand, a development that analysts in São Paulo say reflects growing doubts about the government’s repayment capacity. With the average interest rate on Brazil’s debt approaching 13 per cent, compared with roughly 3 per cent in the United States and 0.5 per cent in Japan, the cost of servicing that debt now runs to around R$150 billion annually, compressing fiscal space and feeding expectations of further monetary tightening.

In Argentina, the government deepened its austerity drive, slashing discretionary transfers to provinces and the city of Buenos Aires by 61.8 per cent year on year in the first half of 2026, the second-worst such semester since records began in 2005. June alone saw an 87.7 per cent collapse in these non-automatic transfers, which are not governed by a fixed revenue-sharing formula but depend on executive decisions. Only three provinces registered any increase, and those came off exceptionally low bases. The cuts were concentrated in infrastructure and general-purpose transfers, while a programme to extend the school day absorbed the largest single share of remaining funds. Overall primary spending by the national administration fell 2.3 per cent in real terms over the semester, with capital expenditure on public works down 32.4 per cent, according to Buenos Aires-based consultancy Analytica.

Colombia recorded a 19.8 per cent year-on-year drop in foreign direct investment in June, to US$634 million, bringing the first-half total to US$4.3 billion, 12.3 per cent below the same period in 2025. The oil and mining sector accounted for three-quarters of June’s inflows, while non-extractive sectors attracted just US$158 million. Export reintegrations from non-traditional goods rose 14.4 per cent, to US$815 million, offering a partial offset on the external accounts, but the overall investment trend points to a narrowing of the productive base.

In Bangladesh, inflation eased marginally to 9.16 per cent in June but has remained above 9 per cent for three consecutive months, while wage growth has lagged behind for 53 straight months, eroding real incomes. With 86 per cent of economic activity in the informal sector, the sustained price pressure has forced households to cut spending on nutrition, education and leisure. A new public-sector pay scale takes effect this month, raising incomes for 1.5 million government employees, but Dhaka-based economists warn that the resulting injection of liquidity could reignite price pressures in food, housing and transport unless accompanied by rigorous market surveillance and parallel wage adjustments in the private sector.

The next factual milestones to watch are the Brazilian central bank’s next policy meeting, where the Selic rate trajectory will be reassessed in light of the deteriorating debt dynamics; the execution of Argentina’s second-half budget, which will test the government’s ability to sustain the current pace of spending compression; and the rollout of Bangladesh’s public-sector pay rise, which will provide an early gauge of second-round inflation effects.