Brazil: political crisis clouds recovery outlook - Wells Fargo


According to analysts from Wells Fargo, it is clear that the Brazilian recession has abated and the economy is poised to come back into positive territory this year.

Key Quotes: 

“It is clear that the Brazilian recession has abated and the economy is poised to come back into positive territory this year. However, the political horizon continues to cloud and this could topple our upbeat expectation for this year. Furthermore, the current recovery is predicated on a continuation in the expansion of the country’s external sector, which is not very clear today. “

“Although the global economy is growing at a faster pace and Brazil is taking advantage of this improvement the Brazilian currency has appreciated considerably since early 2016 and remains relatively strong, which could hurt a sustained expansion of the export sector. Furthermore, agricultural production, which is one of the contributors to this export expansion, is highly volatile and the strong performance during the first quarter of the year is not expected to remain during the rest of the year.”

“Sustained economic growth needs all the cylinders of the economy, but especially the domestic ones, to be pulling together and what is happening today in the political arena could jeopardize PCE and gross fixed capital formation, which are needed for growth to proceed”. 

Brazil: BCB minutes to give hints about the extent of easing in its cutting cycle - TDS
 

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