RBC Predicts Strong Brazil Growth

Brazil’s GDP growth will jump to 6.0% this year and 5.0% in 2011 and is unlikely to fall below 4.5% over the next 5 years, says RBC, which predicts associated BRL outperformance. The Canadian bank notes that Brazil’s government is engineering a pro-growth policy based on a wave of initiatives to boost the economy. The main focus includes credit growth, expansion of investment initiatives and raising the minimum wage. Other important structural factors: the rise of the middle class, long-term decline in real interest rates, upgrade to investment grade, growing Asian commodity demand, and stepped-up FDI inflows, adds RBC.