Financial markets increasingly optimistic about Brazil’s economic outlook

09/03/2018


Fleury, Coimbra & Rhomberg Advogados

After a difficult 2017, the financial markets have grown increasingly optimistic about Brazil's economic future. Investors have become more willing to inject money into Brazilian companies, and São Paulo's stock market has registered successive record-breaking performances.

Brazil's 2018 started off with a far more intense flow of foreign direct investment (FDI). In January alone, FDI amounted to over USD 6bn - that is, twice as much of what was expected. During the month of February, Brazil's Central Bank is expecting another USD 4.2bn of inflow.

Brazilian consumers have also become more confident in their spending. That has translated into over BRL 115bn of revenue in taxes - the best-ever for the month of January. Brazilians are also traveling again, spending just over USD 2bn abroad. That's 27% more than just a year ago.

Market predictions

Another way of analyzing how markets see Brazil would be to take a look at the Focus Report. Published by the Central Bank, the report brings expectations from 120 private banks, investment agencies, brokers, and consultant companies, among other institutions. According to the report's latest edition, investors have raised their GDP growth expectations for 2018 from 2.80 to 2.89%. It marks the second straight time that the markets have raised their GDP predictions.

Meanwhile, investors believe that inflation rates will remain low, reducing their forecast for 2018 from 3.81 to 3.73%. For the coming year, the inflation forecast has remained stable at 4.25%.

 

 

See the news in French here.