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Weekly Report - 09 January 2014 (WR-14-01)
BRAZIL: Fears Brazil’s party year could impact growth
“Sell Brazil in 2014, and buy Brazil in 2015, regardless of who wins the election.” This is the latest recommendation of the director of Foreign Exchange (FX) strategy at Royal Bank of Scotland, Flavia Cattan-Naslausky, in her note to clients. An overall budget deficit of 3.5% of GDP, stubbornly high inflation of 5.8%, and the government’s commitment to subsidising energy and infrastructure were cited as reasons to disinvest. RBS’s pessimistic assumptions for Brazil in 2014 are shared by a majority of local economists who now expect growth to be just 1.95%, according to a central bank survey of 100 analysts published on 3 January. Added to this is the concern that with Carnival so late this year, the World Cup due in June, and elections in October, there could be relatively little time for serious work.
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