Brazil's Economy Is Quietly Surging

Brazil's economy is in the midst of an economic surge that too few are paying attention to. 

• Equity markets are breaking out of a multi-month base
• Inflation rates and prices are dropping rapidly across the board
• Fuel prices have plummeted 
• Unemployment rate has dropped to historic low levels since 2016
• Despite a massive increase in interest rates to 14% the economy is bullish

EQUITY MARKETS

Start with Brazil's ETF $EWZ, which reflects the IBOVESPA

Brazil markets are surging upwards 20% gain in the past 24 days just before the round 2 elections. Overall ETF is up +25% YTD.

A look at the US Markets shows the stark difference YTD

INFLATION

Inflation is dropping like a stone. Broad based inflation is down over 500 basis points or 39% since the beginning of 2022. Hovering around 7%.

Food costs peaked in July this year and continue to fall.

With lowering cost of fuels transportation costs have come down quickly as well.

Gasoline prices plummeted 39% since June 2022 which helps reduce price levels for food and transportation.

EMPLOYMENT & WAGES

The unemployment rate continues a year long slide to levels not seen since 2016. Employment has not been this strong in 6 years.

At the same time, monthly incomes showed a sharp increase and fall after the dispensement of a massive aid package, wages in 2022 have shown a rapid rebound back to pre-pandemic levels.

GROWTH

Is Brazil growing? Yes but slowly. Post pandemic GDP spiked then dropped off to more pre pandemic levels then slowed. The most recent measured quarter puts Brazil back to 2012 levels

Aguriculture continues to grow at a blistering pace.

Transportation sector surged back to 2015 levels.

The fly in the ointment is the shrinking manufacturing sector.