Brazil has the world's 5th largest population (205m) and 9th largest economy. With the Rio Olympics only 32 days away, Brazil should be optimistic and vibrant. But sadly the opposite is the case.
The economy has not benefited from the massive spending on infrastructure. Brazil finds itself in the midst of its worst recession since the Great Depression - in fact some suggest current economic conditions are worse than the 1930s. Here's three facts on Brazil (source: The Economist) that are hard to believe:
1 - a third of Brazil's industrial capacity currently sits idle
2 - Brazil is ranked last of 61 countries for the efficiency of government (it even ranks below both war-torn Ukraine and bankrupt Venezuela)
3 - GDP is 5.4% lower than a year ago in real terms
Brazilian equity returns have been very volatile. The US$3.5 billion iShares Brazilian ETF is up strongly this year but remains down 52% over 5 years. The long and short of it? We continue to have no exposure to Brazil in our World Equity Fund (in fact India is the only BRIC we have exposure to). It is hard to see that changing any time soon....
The Athens Olympics signaled the downward spiral of the Greek economy.... it looks very much like the Rio Olympics are doing the same for Brazil.