Brazil’s Economic Recovery Inspires Foreign Investment
Anyone with their finger on the pulse of global economies in the past few years knows that Brazil has been struggling. It has been experiencing a cataclysmic recession – no doubt one of the worst in decades.
The impeachment of President Dilma Rousseff, whose administration was blamed with causing the recession, marked a turning point. Now, sitting President Michel Temer is focusing his efforts on rescuing the country’s economy.
Temer has introduced a range of policies to stimulate economic recovery. His plan ranges from saving some of the country’s largest companies from bankruptcy by implementing generous debt repayment plans to injecting cash into the country’s economy by allowing Brazilians to legalize money held abroad in fiscal repatriation programs.
One area Temer has also focused on is eliminating bureaucracy, giving incentives to foreign companies wanting to invest in Brazil. His open-door policy, a departure from the previous administration, along with the effectiveness of his economic recovery strategy, has made Brazil an attractive destination for foreign capital.
All of these efforts are starting to have positive effects. Brazil’s stocks have been on the uptick with Brazil’s iShares index increasing more than 11 percent this year. Mid-April results showed an increase of two percent. Brazil’s currency, which in 2016 came in at over four reais to the dollar, has been sitting steady at a little over three reais to the dollar for the first and second quarter of this year. Brazil has also increased its foreign exports to US$153 billion in goods and reduced its deficit by 70 percent at the end of 2016.
These and other factors point to Brazil being well on the path to economic recovery. They have also led the IMF to predict that Brazil will regain its position as the eighth largest economy in the world in 2017.
While previous estimates put Brazil’s recovery this year at a modest 0.5 percent, the rapid growth seen throughout various sectors has increased this estimate to 1.6 percent for 2017 and 2.5 percent for 2018. This slow yet steady recovery has re-instilled faith in Brazil’s economy for foreign investors who are flocking to take advantage of opportunities in Latin America’s largest economy.