Reflections from the road: Contrasting outlooks in Brazil and Mexico

Not all bad news

Christine Reed’s recent trip to Brazil and Mexico revealed a deep contrast in local sentiment and highly divergent outlooks.

Brazil: bearish on Lula's fiscal direction, but this is in the price My trip confirmed that the mood on the ground in Brazil is deeply pessimistic. Since the presidential elections, President Lula da Silva (Lula) has disappointed the markets on a variety of fronts: he has been more successful than expected at increasing fiscal spending; his ministerial appointments are highly questionable; and he has attacked the central bank and its autonomy. It is the first point, fiscal risk, that is weighing most heavily on sentiment. Lula seems intent on driving growth through fiscal spending, whi...