Who knew? In 2016, Brazil weathered a severe economic downturn and a presidential impeachment to score as the top-performing emerging equity market worldwide. The broad stock index returned 61.3% in US dollar terms, excluding dividends, based on data from MSCI. Outsized strength in Sao Paulo-traded equities may in part be attributed to pools of domestic liquidity being put to work for long-term benefit. Investors are confident that the government is serious about reform, including fiscal consolidation, paving the way for an even more vibrant private sector. The economic backdrop should eventually prove to be stunning; we will not see those green shoots until at least 2018. The IMF now forecasts that GDP will recover from a collapse of 3.3% in 2016 to a modest gain of 0.5% in 2017. ■
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