“The season of failure is the best time for sowing the seeds of success.” — Paramahansa Yogananda
October 10, 2016
The situation in Brazil has grown severe in the past two years. Instead of the positivist ethic “Order and Progress,” it seems as if Brazil’s motto is “Chaos and Uncertainty.” It started with the football team’s disappointing fourth place finish as the host of the 2014 World Cup. Then the global commodities rout exposed flaws in recent economic policies. Finally, a sweeping investigation of Petrobras, the national oil company, uncovered a web of graft that pervaded the government and construction industry. The Brazilian juggernaut seems to have veered badly off course.
While the newly-confirmed president has presented what appears to be a credible path to recovery, several factors could drive near-term volatility.
Notwithstanding, we believe that Brasileiros have enough resolve to navigate the short-term dangers, and that our long-term thesis for the region will prevail. As a result, we believe the current environment should continue to attract private markets investors.