Brazil – an Olympian task

There are three factors that have turned Brazil’s fast expansion of the early 2000s into stagflation: a poorer external environment; inadequate macroeconomic management; and a failure to carry through fundamental structural reforms. Most analyses highlight the first two, but it is the last that is the Olympian task facing the country. Unfortunately, meaningful structural reforms seem unlikely to happen whoever wins the presidency in October. So we are short Brazilian financial assets and the real on a one-year view.

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