The markets are positioning for the Brazilian economy to continue expanding, especially from the added investment and growth as the country hosts the 2014 World Cup and 2016 Summer Olympics, but Eurozone woes have tempered the appeal of riskier Brazilian equities and stock exchange traded funds.
The Brazilian central bank revealed Monday that economists have a positive perspective on Brazilian growth rates, with Brazil’s economy projected to expand 3.22% in 2012, up from 3.21%, and 4.3% in 2013, up from 4.25%, reports Rogerio Jelmayer for the Wall Street Journal.
Economists also predict the central bank’s benchmark Selic rate will remain at 9%, near its historic low rates, until the end of 2012 and increase to 10% at the end of next year.
“This puts the bank at a wait-and-see mode. It’s difficult to say what they will do; they left the door wide open,” Italo Lombardi, an economist with Standard Chartered, said following the central bank’s decision, Reuters reports. “The minutes definitely has a bias of lower rates, but not much lower than where we are now.”
Nevertheless, poor economic data out of the Eurozone, especially with Spain confirming its recession, is weighing on riskier assets, including Brazilian equities.
As the country readies itself to host the World Cup and Summer Olympics, Brazil’s economy will also benefit from the added infrastructure expansion, along with the increase in tourism activity the two events will bring. [Brazil ETFs Gear Up for World Cup, Olympics]