After the lackluster growth over 2012, Brazil’s economy could strengthen this year as the government steps in to stimulate the economy, bringing investors back to Brazilian stocks and related exchange traded funds.
Brazil’s government has increased government expenditure and enacted policies to stimulate consumption, which have kept unemployment rates low compared to other developed countries, Zacks reports. [Brazil ETFs Rebounding After Tough 2012]
Specifically, the country’s central bank cut interest rates to increase liquidity, diminish consumers’ debt burden and encourage investments. Meanwhile, the government implemented a series of stimulus measures, such as increased infrastructure spending before the country hosts the 2014 World Cup and the 2016 Olympic Games.
Looking at the Brazilian economy, manufacturing activity is rebounding at the start of the year. The lower tax burden on companies, lower pay roll tax and increased infrastructure spending fueled activity in the sector.
Moreover, the depreciating Brazilian real currency should also help the country’s export industry.