TIME TO INVEST IN BRAZIL???

BRAZILIAN ECONOMY HISTORICAL OVERVIEW

 

According to the Brazilian Institute of Geography and Statistics (IBGE), the main sectors contributing to the Brazilian GDP are: the service sector, which generated BRL 901.4 billion in 2014; manufacturing, with BRL 279.6 billion; and agriculture and ranching, which reached BRL 48 billion.

In 2015 there was a collapse of the economy, due to poor governmental management, in addition to corruption scandals (Petrobras/Lava-Jato). These political vectors culminated with Dilma’s removal from office (beginning of the impeachment process)in May 12, 2016.

Today, Brazil still feels the effects of a fierce stagnation process (recession + inflation), with high unemployment and low liquidity.  The market is still unstable, waiting for the final voting by the Senate, that will finalize the impeachment process.

Nevertheless, the new government staff nominated by Temer has caused a promising impression on the market, especially the economic team, lead by Henrique Meirelles (Minister of Finance).  Fiscal adjustments, strict monetary policy, and market oriented liberal approach, have been the key factors for the beginning of the Brazilian recovery.

The tendency is to confirm Michel Temer as the new president, by the final Senate vote, expected by August 31rst (ends impeachment process).  With a busy international agenda, that includes the G20 summit in Beijing (September), Mr. Temner and Jose Serra (Minister of Foreign Affairs) will travel the world in search for foreign investments in sectors of infrastructure, such as: agriculture, logistics, transportation, energy, and IT.

As a clear sign of the recovery to come, IBGE has developed the chart above.  It shows the cycles of deep crisis and quick recoveries in Brazil, since 1904 (historical events).

Brazil is on the verge of what has been called TsuMoney (huge wave of investments and capital flow into the local economy).  As a result, analysts expect the valuation of the Real (Brazilian currency) and domestic assets, such as real estate and commodities, to rise significantly between now and 2020.

If you are thinking of investing in Brazil, we welcome you to…

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Daniel Majzoub

daniel@hmpattorneys.com