At the macroeconomic level
As Brazil has emerged from its worst recession in recent history, in many ways, Bolsonaro and his team have inherited a healthier economy, in cyclical upswing and posting positive GDP growth. The central bank has maintained its benchmark Selic interest rate at historic lows, and inflation hovers near comfortably low levels. And while the rest of the world ponders the timing and source of the next correction in the markets, Brazil is relatively well-poised to withstand external shock, such as a global recession.
At the geopolitical level
Whether or not the pension reform passes depends on the ability of the new administration to push it through Congress. Bolsonaro’s PSL party is not a majority party in either the lower house (the Chamber of Deputies) or the Senate - and passing a new pension reform requires two-thirds of the vote.
Bolsonaro’s ability to build a “cross-bench” support base will be critical - as will his ability to ally with the new speaker of the house on a pro-reform agenda.
At the sector level
The potential for new privatizations in infrastructure - including ports and power generation - is material, and for a country with a wealth of sun and wind, opportunities in renewable energy also abound. Brazil is the largest recipient of venture capital (VC) investing in Latin America, and its thriving e-logistics market is alluring for both real estate and VC funds alike.
Infrastructure and green energy:
Bullish on the prospects for the new government in Brazil, some of the world’s largest infrastructure investors are poised to allocate large amounts of capital - and to potentially take advantage of privatization efforts as and when these arise.
VC, financial services and real estate:
With a greater presence on the ground in Brazil, incoming foreign banks may yield corollary commercial real estate investing opportunities in the country’s commercial hubs.