Reprinted from Barron’s
By, Christopher C. Williams
T he carnival is over in Brazil, at least for the next six months. After surging 7.5% in 2010, the world’s sixth-largest economy is expected to grow just 1.5% this year and 4% in 2013, amid slowing global demand for natural …
…Canada’s BCA Research has been underweight Brazil and other emerging markets for almost three years; managing editor Arthur Budaghyan sees no reason to change his bearish, and prescient, view yet. The just-right, or “Goldilocks” scenario for Brazil is for growth to accelerate while inflation remains stable or in retreat. But Budaghyan gives that prospect only a 5% to 10% probability of materializing.
“The underlying causes of capacity strains are a lack of investment and supply-side reforms”, he wrote recently. “This is capping the economy’s growth potential. As such, odds are that inflationary pressure will rise strongly as soon as growth accelerates.”
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