Swings in Brazil’s equity and currency markets this week suggest that investors are coming to terms with the idea that pension reform will be diluted. But there are much greater concerns about disputes between the Bolsonaro administration and his fragile alliance in congress, which could bring reform efforts to a standstill. Elsewhere, the collapse in Argentine GDP in Q4 reinforces the point that President Macri faces an uphill task to stick to IMF policies yet, at the same time, boost his flagging support ahead of October’s election.
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