“Capital flows have significantly exacerbated domestic problems like bubbles and inflation that could potentially throw emerging economies off their growth paths and produce social instability,” Cornell University economist Eswar Prasad stated.
“I don’t see a bubble. Capital flows are a natural outcome of all the good news in Brazil,” Fabio Barbosa, the chief executive of Abril SA and a board member Petroleo Brasileiro SA, remarked. “The issue is how can we remain competitive within a scenario of a stronger currency, which in my opinion is here to stay.”
iShares MSCI Brazil
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Max Chen contributed to this article.