Brazil notched up two records this week. The Bovespa stockmarket index eclipsed 47,000 for the first time after doubling over the past three years and the Brazil risk index hit an all-time low, reflecting vastly improved confidence in the economy among foreign investors. No wonder: under Brazil's left-wing government, inflation has been tamed and debt has fallen, while the currency has strengthened a far cry from the days of the country's rampant inflation.
The ongoing commodities boom has delivered a trade surplus and the domestic economy is strengthening, following 14 consecutive cuts in interest rates to a record low of just under 13%. Real household incomes were up by an annual 4.7% in January, underpinning retail sales growth of 8.5%. Brazil's domestic economy has "excellent" fundamentals, analyst Daniel Gorayeb of Spinelli Corretora told Bloomberg. Bank lending rose for the 35th successive month in January and was up 21.4% year-on-year, and there's scope for further credit growth in the economy: the mortgage to GDP ratio is still at just 2% (compared with 66% in America), says Merrill Lynch.
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