Brazil Country Risk Report 20 2018

Brazil Country Risk Report 20 2018

Brazil's economic rebound will be driven by private consumption growth and buoyant investor sentiment. However, the October elections will likely undermine confidence in the latter months of the year, posing headwinds to investment growth.

The election campaign season will heat up over the coming months, narrowing the possibility for significant legislation to advance, raising the risk of volatility shifts in investor sentiment.

The field of candidates is still unsettled, but competition among a number of relatively weak centre-right contenders raises risks that non-reform supportive candidates will advance to the second round.

The Banco Central do Brasil will most likely enact one more 25 basis point rate cut in 2018 in light of below-target inflation. However, infla-tion will likely trend upward over the coming months, leading to rate hikes in 2019.

Over the coming decade, Brazil will only experience modest levels of growth as structural headwinds limit any quick economic solutions to the challenges faced from falling global commodity prices.