With the beginning of Dilma Rousseff's last stage impeachment, expectations turn to its possible economic consequences. Despite the complex political plot that involves the procedures, the financial market should see with good eyes the definitive removal of the president of Brazil.
The impediment has lasted more than eight months and, with its end approaching, expectations rise up for the economic future of Brazil. Political and economic transformations are expected by investors, as many believe that Vice President Michel Temer is capable of regaining market confidence.
One of the largest economies in South America, Brazil receives increased attention by the financial market during the last days of the Impeachment rictus. Despite the high expectations of investors, it is impossible to determine accurately the real consequences that will happen soon.
Among the estimates about the economy, there is special emphasis on investments in the stock market. It is expected that with the completion of the impeachment process, the flow of investments directed to Brazil will gradually increase. However, there are exceptions to this possibility. One of the factors that can disturb the Brazilian recovery is the increase in interest rates in the United States.
Among the positive aspects that can attract foreign capital into the stock market in Brazil, there is the reduction of political risk and the evolution of tax measures that will soon enter into vote in Congress. The third factor is the reduction in domestic interest rates, which can make assets prices more attractive to investors. The fourth and final aspect to be considered is the economic recovery, which will possibly allow an industry growth.
For the long term, the outlook appears more complex. Much of the economic improvement of Brazil depends on the votes of fiscal measures. However, Temer government may have to deal with more demanding investors for structural reforms. Many experts, however, say it is necessary to have patience in this regard. The country depends on the adoption of these measures, but the tax issue is unlikely to be completed quickly.
In the domestic market, the attention turns to the recovery of the Bovespa Index, linked to the Brazilian Stock Exchange. In this regard, it is expected that the Ibovespa can start taking the course of rehabilitation. However, this progress is also intrinsically linked to Michel Temer's ability to deal with the reform proposals.
The price of the dollar against the Real also brings high expectations. It is estimated that the exchange rate could reach the level of R$ 3.00 since there is a rise in the Real against other emerging currencies. Since January 2016, the dollar has accumulated a decrease of approximately 20%. Thus, there is a proof of optimism about the near future, although the actual economic changes can only be checked after the end of the Brazilian Impeachment's turbulence.
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