Emerging markets will likely be the primary driver of global growth in the coming years, and Brazil is positioned positively given an expected radical shift in its economic and political fundamentals and, consequently, a more market-friendly approach.
Over the next years, under new President Jair Bolsonaro, Brazil will likely move toward globalization, free trade, increased national competitiveness and a reduction of bureaucracy to overcome its national deficit and high level of unemployment. Public pension and tax reforms, as well as a substantial reduction in government spending, will likely be approved in the first half of 2019.
Financial markets already reflect investor confidence in the new government and its cabinet. The IBOVESPA index reached an all-time high (96k points) in the first two weeks of government, responding well to the speech of new Economy Minister, Paulo Guedes, relating to a considerable movement toward privatization, a stronger control over government spending and fiscal austerity. A real ode to free market.
