Good morning. The picture doesn’t look good for Brazilian economy. Government investment at lowest in a decade. The risk of another Vale dam collapse.
Economy: a perfect storm is brewing in Brazil
Bearish economic forecasts, persistent unemployment, and a government seemingly in disarray. The picture doesn’t look good for Brazil and markets have become increasingly fed up with the administration, which has been, to this point, unable to get its flagship reforms approved by Congress. On Thursday, the São Paulo stock exchange index fell to below 90,000 base points for the first time since January, and the Brazilian Real crashed as low as 4.0411 per USD.
Meanwhile, hopes for even lower interest rates (a move to stimulate consumption and investments) were crushed by Central Bank President Roberto Campos Neto, who said he won’t sacrifice inflation control for boosting growth. “There is no
country in the world with low inflation, low interest rates, anchored inflation expectations, and a messy fiscal situation. It just doesn’t exist,” he added.
Economy Minister Paulo Guedes tried to boost expectations, saying that the heads of the House and Senate promised to approve the pension reform bill within 60 days—which would “totally change expectations towards...