What to Expect from Brazil’s Economic Recovery
The government is introducing reforms to attract investment.
After spending the last seven quarters in recession, Brazil’s economic downturn appears to have bottomed out and recovery is in sight. Planned government reforms to stimulate the economy are underway. These reforms are meant to both help stabilize the national macro-economic scenario and increase the country’s attractiveness to investors. Over time, the effects of these reforms will support a gradual recovery and create a better position for the country during any future economic challenges.
- There is abundant anecdotal evidence coming out of Brazil’s business community suggesting that the private sector is preparing for growth and a stronger economy next year.
- Key reforms in government spending caps, oil industry regulations and concessions will lay a stronger foundation for the economy but will require some time before the effects are felt.
- The observed recovery in Brazil will appear less dynamic than previous recoveries due to the effects of an adverse economic scenario at the global level.
Similarly, reports on Brazil’s economic performance also vacillate between positive and negative. In September, both consumer and business confidence reached their highest levels since January 2015 and July 2014, respectively. Last month, inflation slowed to its lowest increase in 27 months, and there was a slight uptick in manufactured exports during the third quarter. Conversely, unemployment has not improved and there has been a slight decline in overall industrial production. Tax collection in the third quarter was weaker than anticipated, and second quarter GDP performance was also weaker than anticipated.