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Brazil Slowdown Likely Just Pause

But the pressure on the Brazilian real poses a challenge for treasurers.

By John Hintze | Updated on August 17, 2012
Brazil’s economic growth party has paused, prompting global companies to consider tactical measures to hedge risks, but the long-term outlook for Latin America’s economic powerhouse remains strong.

Srinivas Thiruvadanthai, director of research at the Jerome Levy Forecasting Center, says he expects Brazilian interest rates to continue to fall—ultimately a boon for local businesses—and the real to remain under pressure, even after plummeting 23% against the dollar since June 2011.

“The economy will be under duress this year, but afterward will probably improve,” says Thiruvadanthai, adding that of the major emerging markets, Brazil is probably best placed for a rebound because it’s less dependent on exports than China or Russia and doesn’t have India’s “intractable” inflation.

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