Brazil’s Political Scenario – A Nightmare for Investors

Investors have forecasted that if a left-wing party comes into power again, this place will prosper financially and economically like Turkey in the near future. According to different investors and banks, like Brown Brothers Harriman & Co. predict that real will tumble 20% to 5 per dollar. Whereas America Merrill Lynch forecasted a more depressing drop of 5.5 for the coming government. Moreover, it is predicted that the Ibovespa index may fall more than one third from its original value.

The above-mentioned predictions are more of a disastrous threat for the coming Worker’s party government. The great investors targeted the previous government as the actual culprit for the upcoming recession in the economy of the country. Turkey and Argentina are the best examples to get a lesson as they are a proof that how countries lose in their financial markets if the investors are left with no confidence in their policy-making institutions. To avoid such an alarming situation the Worker’s party has to moderate its views according to the prevailing scenario. According to a prediction of Escobedo, a forecaster in Brazil said that if the Worker’s party win in the near elections, the real will go to 4.5 per dollar.

As declared by Haddad, the Worker’s party would roll back Timer's move in order to ease labor rules and implementing intelligent policies. The mandate of Worker’s party is also to favor capital controls to ultimately decline the currency volatility trend and promoting economy sectors.