Brazil’s rebound remains uncertain

After a poor 2012, the central bank forecast growth of 4% for 2013; it has already cut this to 3.1%. International investors are going elsewhere in the region. With domestic investment falling, Brazil will do well even to hit that target.

The renaissance of Mexico and strong growth in the Andean countries have been casting an unfavourable comparative light on Latin America’s largest economy for nearly a year. But now weakness in the Brazilian economy is increasingly looking absolute and not just relative.

The linked challenges of political risk and a slowing economy have hit investor appetite at home and abroad. Investment – already at low levels – has stalled, slowing GDP growth to 1% in 2012.

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