Bet on Brazil: 3 Prudent Choices

In December last year, Brazil’s economy posted its worst quarterly performance in four years. The economy shrank by 0.5% compared to the third quarter, or by 1.9% on an annualized basis. This was an indication of the challenges the country has been facing for some time now.

Brazil’s Challenges

Growing by 7.5% in 2010, the country’s economy had become a favorite destination for global investment. Since then, Brazil’s fortunes have declined rapidly due to several factors. These include fiscal profligacy, infrastructural bottlenecks and excessive red tape. For instance, the state has set price ceilings on fuel to curb inflation. This, in turn, has a detrimental impact on the fortunes of government owned Petroleo Brasileiro S.A (PBR - Analyst Report).

However, steep inflation continues to be the greatest of the country’s woes. A series of rate hikes since April last year have reduced the rate of price rise to their lowest point in a year. However, inflation still remains significantly higher than the official target center of 4.5%.  (more)
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