BlackRock's Latin America manager Will Landers expects the removal of Dilma Rousseff from office to put Brazil on a path to economic growth.
On Wednesday, Brazil's Senate voted to remove its first female president from office for manipulating the budget, putting an end to the left-wing Workers’ Party’s 13 years of power.
Landers expects that the current government, headed by the more business-friendly Michel Temer, will move forward with a positive agenda to improve Brazil’s fiscal performance.
‘[It] results in falling inflation which will allow the Central Bank to reduce Brazil’s interest rates, and therefore set Brazil’s economy back to a sustainable growth path,’ he said to Citywire Americas.
‘Today the country accounts for approximately 60% of our diversified portfolios, over 4% overweight,’ said Landers, who was born in Sao Paulo.
Gonzalo Pangaro, manager of the T. Rowe Price Emerging Markets Equity fund, also welcomed the news that Temer, who has acted as an interim president since Rousseff’s impeachment procedure began in May, will lead the country till January 1, 2019.
According to Pangaro, social security reforms will need to be on the table as an anchor for fiscal consolidation, along with other revenue raising reforms to encourage investment.
‘Political change is needed to address the fiscal mess, with Brazil now back in a primary budget deficit for the first time in over a decade,’ said Pangaro.
‘Michel Temer has no choice other than to move in the direction of market-friendly policies and inspire confidence of an economic revival.’
Pangaro recognized that the downturn in commodities demand has impacted Brazil negatively, but troubled internal politics were also part of what caused dour economic conditions.
‘A large part of the fiscal deterioration has been due to government mismanagement,’ he said.