The Brazilian economy has been marked, in the last days, by two contradictory news:
– on 23/2 the rating agency Fitch lowered the note from Brazil, taking it from BB to BB-
– on 26/2 the IEDI (Instituto de Estudos para or Desenvolvimento Industrial) announced that the Brazilian industry in 2017 recorded an increase of 2.5% compared to 2016, after three years of consecutive fall (-6.4 % in 2016, -8.3% in 2015 and -3% in 2014)
The downgrade of the Fitch note follows that of Standard & Poor’s a month ago (BB-), and is a consequence of the failure to approve the pension reform, filed by the Brazilian Parliament and intended to be discussed only in the next parliamentary term.
On the other hand, the news of the industrial growth registered by the IEDI confirms that Brazil has now emerged from the worst economic crisis in its history. According to the analysis, 58 of the 93 industrial segments analyzed showed growth in 2017. In particular:
– cars: + 19.5% (-11.3% in 2016)
– truck / bus: + 26.0% (-11.3% in 2016)
– electronic components: + 33.4% (-11.9% in 2016)
– communication tools: + 27.9% (-8.4% in 2016)
The level of utilization of industrial production capacity is estimated at 75%, the best level recorded since 2015 but still far from stimulating a significant recovery in investments in capital goods (machinery, equipment, etc.) by companies.
In this context of contradictory news, an optimistic view on the future of the Brazilian economy prevails among investors. The Brazilian stock exchange (Bovespa), in yesterday’s session (26) has passed yet another historical record, reaching 87,652 points: a hot streak of nine consecutive sessions, the best performance among all the stock exchanges worldwide.
Some analysts expect, in the coming weeks, a correction of the stock values of Brazilian companies, which leads to a realignment with the performance of the US stock exchanges.