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Brazil: Mixed Business Outlook

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Brazil’s economy will fall this year, but experts remain optimistic about its outlook due to good fundamentals and huge potential.

BY JOACHIM BAMRUD

Jaime Ardila, the president of GM do Brasil and GM Mercosur, is concerned about the slowdown in Brazil, while also seeing the continued strong potential Latin America’s largest economy offers. “As a large commodity exporter Brazil has been impacted by the overall economic downturn, and it is likely the economy actually contracted in the fourth quarter 2008,” he says. “However, Brazil is showing some resilience compared with other emerging markets due to the good health of the financial system and the quick government response in terms of fiscal and monetary stimulus.”

This year, Brazil’s economy will likely fall by 1.0 percent, Credit Suisse predicted this week in a revised forecast. That compares with an estimated growth of 5.1 percent last year. The dismal forecast is nevertheless less negative than the outlook for Latin America as a whole, which will likely contract by 1.2 percent, according to Credit Suisse. “Brazil’s performance will still be better than most Latin American nations,” says Jerry Haar, Associate Dean and Professor in the College of Business Administration, Florida International University.

POLITICAL OUTLOOK

And unlike Latin American neighbors like Venezuela or Argentina, Brazil does not have a negative political outlook that could further worsen its economy, says Alberto Ramos, senior economist for Latin America at Goldman Sachs.
“The risk of observing serious policy reversals seems to have been reduced very significantly,” he says. “In all, we are very constructive regarding Brazil over the medium- and long-term and...



Keywords: Benefits, Challenges, GDP, Infrastructure, Labor, Politics, Tax, Trade

 

 

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