Brazil Finds a Sweet Spot Between Cheap Money and a Trade War
Low interest rates, tame inflation and coming pension reforms bolster the country’s equity market.
Brazil is poised to lead growth in Latin America.
Photographer: Buda Mendes/Getty Images
When Brazil’s benchmark Ibovespa stock index reached a record on July 10, it was a milestone that few predicted. A 26% return over the previous year has made the country the top emerging market, beating 32 others that lost 7% collectively. The performance was even more impressive considering Brazil’s economy is barely growing at a 0.9% annual pace.
Defying skeptics, Brazil is taking advantage of a rare sweet spot, benefiting from unprecedented favorable interest rates, retreating inflation and the trade war between the U.S. and China. While much of the world is focusing on thousands of fires in the Amazon and President Jair Bolsonaro’s response to them, Latin America’s largest economy and its historically malnourished shareholders are at a turning point.