Aberdeen LAQ Manager: Brazil “Looks to be Slipping Into a Recession”

Nick Robinson, the Director / Head of Brazilian Equities Aberdeen Asset Management and a manager for the Aberdeen Latin America Equity Fund, Inc (NYSEMKT: LAQ), recently did an interview where he commented:

2015 is likely to be a pretty tough year for Brazil as it looks to be slipping into a recession caused by the twin headwinds of both tightening monitory policy and significant fiscal tightening. GDP growth is weakening, and at the same time there is a collapse in consumer confidence driven by the corruption scandal at Petrobras. As more unfolds around the scandal, it is proving to be significantly worse than anyone expected prior to the election.

However, he also added:

The government has moved quickly to try and repair some of the damage that was done during the build-up to the 2014 election. So far, the SELIC1 rates have been hiked quite significantly in an effort to stem inflation. The new finance minister, Joaquim Levy, has instigated a very significant fiscal tightening, announcing an adjustment in an attempt to restore the primary fiscal surplus. This includes the reduction of unemployment and pension benefits, as well as tax breaks for specific industries that have been rolled over in the past. There have also been tax increases on fuel and electricity, for example. While this could be a painful adjustment for Brazil, it will also improve Brazil’s chances of maintaining its investment grade rating.

To read the whole interview, Aberdeen Latin America Equity Fund, Inc. (LAQ): Fund Manager Interview, go to the website of Aberdeen Asset Management. In addition, check out Latin American Stocks to Consider (Aberdeen) along with our Latin America Closed-End Funds list, our Latin America ADR lists, Latin America ETF lists and Brazil ETF list.

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