How are inflation worries playing into the story?Zalkin: Brazil’s persistent inflation concerns continued in July as the 12-month inflation rate reached its highest level in six years. But concerns about global economic growth and expectations for a retreat in prices later this year will prevent the central bank from raising interest rates when it next meets on August 31 as it had recently been expected to do.While Brazil’s central bank targets inflation of 4.5%, plus or minus two percentage points, consumer prices rose 6.9% in the 12 months through July, the fastest pace since 2005. Inflation is expected to peak and then start to trend down by the end of the year.While interest-rate hikes and other measures implemented earlier this year may not be enough to bring inflation down to its target in the next year, the stumbling global economy may provide a helping hand. A decrease in the commodity market, lower fuel prices and weakening global demand are all likely to relieve inflationary pressure and even give room for policy makers to cut interest rates if the economy continues to decelerate.If inflation resists these external factors and continues to spiral out of control, the government will be forced to raise interest rates yet again and risk choking off any significant economic growth.How do you think the Olympics and World cup will impact the economy?Zalkin: The World Cup and Olympics will bring significant economic and structural benefits to Brazil and will also advance the country’s planning and infrastructure network. Increased investment in airports, the power grid, railways, roads and other transportation, hotels, telecommunications and environmental projects will all have a long-term impact on the Brazil economy that will transcend the direct impact of the actual events.While this is a very brief synopsis of the Brazilian economy, investors looking for potential growth markets may want to research the Brazilian market. Then speak with your financial adviser to see if an investment in Brazil fits into your long-term asset allocation and risk profile.aaron@lighthousecapital.co.il Aaron Katsman is a licensed financial adviser in Israel and the United States who helps people with US investment accounts.
Your Investments: Brazil more than just global soccer power
With the seventh-largest economy, investors looking for long term potential growth investments may want to take hard look at Brazil.
How are inflation worries playing into the story?Zalkin: Brazil’s persistent inflation concerns continued in July as the 12-month inflation rate reached its highest level in six years. But concerns about global economic growth and expectations for a retreat in prices later this year will prevent the central bank from raising interest rates when it next meets on August 31 as it had recently been expected to do.While Brazil’s central bank targets inflation of 4.5%, plus or minus two percentage points, consumer prices rose 6.9% in the 12 months through July, the fastest pace since 2005. Inflation is expected to peak and then start to trend down by the end of the year.While interest-rate hikes and other measures implemented earlier this year may not be enough to bring inflation down to its target in the next year, the stumbling global economy may provide a helping hand. A decrease in the commodity market, lower fuel prices and weakening global demand are all likely to relieve inflationary pressure and even give room for policy makers to cut interest rates if the economy continues to decelerate.If inflation resists these external factors and continues to spiral out of control, the government will be forced to raise interest rates yet again and risk choking off any significant economic growth.How do you think the Olympics and World cup will impact the economy?Zalkin: The World Cup and Olympics will bring significant economic and structural benefits to Brazil and will also advance the country’s planning and infrastructure network. Increased investment in airports, the power grid, railways, roads and other transportation, hotels, telecommunications and environmental projects will all have a long-term impact on the Brazil economy that will transcend the direct impact of the actual events.While this is a very brief synopsis of the Brazilian economy, investors looking for potential growth markets may want to research the Brazilian market. Then speak with your financial adviser to see if an investment in Brazil fits into your long-term asset allocation and risk profile.aaron@lighthousecapital.co.il Aaron Katsman is a licensed financial adviser in Israel and the United States who helps people with US investment accounts.