Brazil's Big Election

Reuters
October 4, 2018 Topic: Security Region: Americas Tags: BrazilElectionPoliticsEmerging MarketEconomy

Brazil's Big Election

Brazil is at a crossroads and its 2018 election is definitional.

For investors Brazil’s elections mean that political risk is a major factor through the elections and possibly longer depending on who wins. However, that could be partially mitigated by any improvements in commodity prices, which are central to the Brazilian economy. Oil prices have been on the rise as have other commodities and thus far the U.S.-Chinese trade war is helping Brazil’s agricultural exports. If Brazil can get its political house in order, it could prove to be one of the more interesting Emerging Market options for 2019.

Scott B. MacDonald is chief economist for Smith’s Research and Gradings.

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