Good morning! In today’s issue: Brazil needs to boost investment to break the vicious cycle of poor growth rates. Revelations from a plea bargain could be devastating to big banks. Truckers threaten a new strike. Brazil’s meat sector booming after Chinese swine fever. Enjoy your read!
Public investment in Brazil at a 50-year low
With the Brazilian federal government battling huge deficits and state administrations nearly bankrupt, investment levels in Brazil have fallen to their lowest level in 50 years. In Q1 2019, the rate of investment has retracted to 15.5% of GDP, from 15.8% in the previous quarter. Just like public investment, private investment has also consistently dropped since 2013.
Why it matters. In 2018, 152 countries had investment levels higher than Brazil’s. Among experts, it is a sort of consensus that the trend must be reversed in order to foster growth. But private investors have been shy due to uncertainties surrounding the Brazilian economy—from the 2018 election to how reforms would pass in Congress.
Hopes are that the recent progress of the pension reform might signal that Brazil will take the path of...