Emerging market spotlight: Brazil focuses on recovery

Article Excerpt

Brazil’s economy continues its slow recovery after a major recession in 2015-2016. That’s when the economy contracted 7% over that two-year period. Ongoing turmoil—the impeachment of president Dilma Rousseff in May 2016, corruption scandals for a major corporation, volatile commodity prices, and high inflation—kept the pressure on financial markets. The result was a broad decline for the Brazilian market: it fell as much as 34% between February 2016 and mid-September 2018. However, a mild economic recovery, which started in 2017, is gaining momentum. Inflation is now under control, and unemployment is falling. Brazilian GDP growth is now forecast at 2.5% for 2019, double the growth achieved in 2017-2018. The October 2018 presidential victory of controversial politician Jair Bolsonaro, who campaigned on the promise of zero tolerance for crime and corruption, also spurred some investor confidence. Bolsonaro has decided to merge certain government ministries and has appointed the nationally respected Paulo Guedes to head the consolidated economy ministry. Those moves have…