Investment Prospects in Brazil

As the World Cup 2014 kicks off in Brazil, Threadneedle examines the country's investment prospects against a backdrop of a weaker economy and a disatisfied nation

Threadneedle Investments 10 June, 2014 | 1:00PM

This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, Threadneedle’s Latin America fund manager Daniel Isidori reflects on the current pressures Brazil is facing 

In 2006, when Brazil won the right to host the World Cup, the government hoped it would showcase the progress the country is making to becoming an economic giant. Back then the economy was growing by 4 to 5% a year powered by high commodity prices and domestic consumption. However, economic growth has faltered in recent years. Commodity prices remain well below the peaks reached in the middle part of the last decade, while domestic demand has been softening with consumers now weighed down by high levels of debt.

The run up to the World Cup has also highlighted widespread dissatisfaction among Brazilians. Protesters have taken to the streets of many cities to attack the government for the perceived high cost of preparations for the World Cup and the 2016 Olympics, which will be hosted by Rio de Janeiro, calling for the authorities to place more priority on education, health and transport. President Dilma Rousseff, who is seeking re-election in October, has sought to deflect criticism, saying that the World Cup will spur growth.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Petroleo Brasileiro SA Petrobras ADR7.23 USD3.88

About Author

Threadneedle Investments  actively manages £84.0 billion of assets (at 31 March 2013), investing on behalf of individuals, pension funds and corporations.

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