Still, eager Brazil bulls should note a Silva victory is not etched in stone. Eurasia Group gives Rousseff a 55% chance of reelection, reports Barron’s.
It is also worth noting that Silva’s environmental track record has lifted her in the polls. How long that can be sustained is debatable, particularly at a time when Brazil’s economy is struggling. Brazil’s central bank said earlier this week private sector economists are expecting Latin America’s largest economy to grow a scant 0.7% this year.
By comparison, Colombia’s economy, South America’s second-largest, is expected to grow 4.7% this year while Peru’s GDP is forecast to jump 5%.
Investors and Brazilian voters alike should consider the risks associated with electing an environmentalist at a time of economic strife. There is a template for such moves in the U.S. and it is called California. Hint: California, the largest state economy in the U.S., has significantly lagged the broader U.S. recovery.
iShares MSCI Brazil Capped ETF