Just got a MS email which says the Brazil economy is red hot and growing at 9.% YOY in q1. This is over double from q4. Economists believe this is related to "real" stabilization plan. Investments have jumped 26% YOY. Retail sales are up 28 percent YOY. (It has been reported that there is shortage of beer cans in Brazil.)
There is a problem with inflation. The central bank target is 4.5% but the IPCA CPI is up 5.22% YOY. This is not significntly above the target but elevls have increased significantly since 2008 nd food costs are up the most of any components.
The SELIC overnight rate is at 9.4 percent so the central bank has been trying to reduce liquidity and control inflation. The target rate has been raised 75 bs in the last month.
Surprisingly, the Bovespa stock index is down 9 percent for the year. This is much worse than say Chile which is positive 8 percent and Argentina which is down only 5 percent.
There is a problem with inflation. The central bank target is 4.5% but the IPCA CPI is up 5.22% YOY. This is not significntly above the target but elevls have increased significantly since 2008 nd food costs are up the most of any components.
The SELIC overnight rate is at 9.4 percent so the central bank has been trying to reduce liquidity and control inflation. The target rate has been raised 75 bs in the last month.
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