When politics don’t interfere in the economy
São Paulo, Brazil

São Paulo, Brazil

7th July 2017

By Ingo Plöger, President, Strategic Council of CEAL
Political turmoil normally has a great influence on economic developments. Latin America has a long tradition that when political disruption occurs, short-term indicators blow up. In the case of Brazil, we see every day in the news a new political issue that would make any entrepreneur take a deep breath before starting a business in a normal way.
In the past months, the political transformation in Brazil is affecting the Presidency and putting the country on alert as to whether or not they will stay with the vice president in office for a longer time or if they will also impeach him. As this process of cleaning up corruption in the institutions started in 2013, the Brazilian economy reacted in different ways. Normally, indicators like the currency exchange or stock market react immediately over a political scandal, pricing the instability in one form or another. However, what can be observed over the last half year is that the real to the U.S dollar hasn’t changed much, as well as the BOVESPA Stock index. The inflation rate is falling down faster than predicted, putting pressure over the inter-banking interest rates (SELIC) to decrease. The economy begins to show up some indicators of recovery such as the increase of exports, and  increase of imports to supply local and transformed products for export.
The local automotive market that was strongly affected by the economic recession, begins to show some indicators of …

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