One factor that has been missed amid the growing debate about the weakness of Brazil’s economy is the continued slump in investment and, more worryingly, the fact that there is little prospect for a recovery. In the meantime, the softness of the recently-released GDP figures in Chile and Brazil has caused markets to shift towards our dovish view on the outlook for interest rates. While we haven’t currently pencilled in any easing, the chances of rate cuts are rising.
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