The world’s attention has turned to Brazil once again. The past summer was a captivation during the World Cup event and the upcoming summer 2016 Olympic Games in Rio is expected to present the same excitement. While the country has enjoyed all the attention of the world due to these major sporting events, the nation’s economic climate is one that requires a lot of attention according to the PR Newswire website. Brazil has been under the “new economic matrix” that has failed terribly despite promises from the current president Dilma Rousseff to change to a new course of action. However, experts believe she will have to stick to her populist policies even though they have been proved to be ineffective in 2014.
The best hopes for the country is to return to the market-oriented economy the Brazilian market was shown to be fruitful until 2008. However, the “new economic matrix” has included slashing the stock prices within the markets especially the sectors which the government has intervened. The GDP growth has decreased to two percent taking it back to $2.5 trillion. The current governance has disappointed the investors in the past six years. In spite of the current economic woes, Brazil is still the eight largest economy in the world and still rich in natural resources, growing middle class, and competitive agriculture production.
This new hope is expected to be implemented by the newly appointed finance minister Joaquim Levy. With vast experience in Federal administration from 2002 to 2007, he is man poised to be fit for the job, to prepare for the necessary reforms of bringing back the economy to track. The problems affecting the Brazilian economy are affecting banking market especially the investment banks. However, despite this economic woes, the top two banks Itau Unibanco (ITUB) and Banco Bradesco (BBD) saw their shares rise by up to one-third in 2014. The two banks had good returns in profits with their third quarter jumping to 36% and 28% respectively, compared to a year earlier.
The question is, how did the biggest banks in Brazil weather the storm? Igor Cornelsen has explained that it all goes down to having the right knowledge of the market and learning from previous experience. According to Igor Cornelsen on brandyouself.com, the Brazilian bankers especially the private sector are only lending to borrowers who are worthy of credit to both streamline costs and provide the banks with a sense of security going forward. The people with less desirable credit are forced to turn to the public sector banks hence posing a challenge for the macro economy and development of the country.
According to Igor Cornelsen, before you choose any place for investment, it is important to know the bare-bones (the basics). The Brazil’s abundance of natural resources and rising need for infrastructure development makes the country still an attractive place for investment.