News from 2016-12-13 / KfW Research
Brazil – in search of the next growth engine
The deep recession of 2015/2016 was mainly caused by demand-side factors. The legacy of the 2000s such as high private and public-sector debt levels will likely prevent a quick and strong recovery of consumption. The upturn will therefore have to rely on investment. An increase in investment activity would also strengthen potential growth. The opportunity is also there to make the economy more flexible, more open, more competitive and more investment-friendly so that it can manage structural changes and cyclical fluctuations more effectively.
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