2018 Investment Outlook – Brazil
Over the past few years, Brazil has weathered significant social, political and economic shocks, driven by both internal and external factors. The slowing of China’s economy and the end of the global commodities “super-cycle” boom in 2012 hit Brazil’s terms of trade hard, causing its currency to depreciate by nearly 70% from 2012 through 2015. Lower commodity prices also strained the government’s finances, curtailing spending and precipitating the end of former President Dilma’s populist rule in 2016. Business and consumer confidence collapsed as the country entered its deepest recession on record, contracting by more than 7% in real terms during the 2015-16 period. Fixed investment slowed. Unemployment increased to over 10%. Inflation hit double-digits in 2015 as imported goods were suddenly more expensive in local currency. Local interest rates increased to 14.25%. International newspapers predicted that the 2016 Olympic Games in Rio would be a bust and that a mosquito-borne virus would wreak havoc on the country. The country’s highly unpopular President Dilma was impeached and removed from office in 2016.