![]() However, underinvestment in Mexico’s energy and water infrastructure – particularly in the north – means spare capacity is limited this poses the risk of extra investment into the country potentially adding to inflationary pressures.įortunately, President Andrés Manuel López Obrador (AMLO) is growing more pragmatic on his energy policy, recognising that the state-owned utility company CFE is not delivering on what is needed for increased investment in the north of the country. ‘Nearshoring’ by the US (moving part of production to countries that are geographically closer) and its potential to underpin growth and boost investment was a theme that came up several times during my trip. ![]() Mexico: creeping optimism amid signs of AMLO pragmatism ![]() While the overall direction of the Lula administration is worrisome from the perspective of debt investors, these shorter-term cyclical dynamics offer opportunities for the active investor. A buoyant agricultural sector, which is enjoying a strong year, is a bright spot for growth, with the resultant currency inflows from soy exports likely to boost the Brazilian real over the next few months.īetter times on the horizon for emerging marketsįurthermore, the central bank’s decisive reaction to rising inflation last year – together with the downturn in domestic demand, well-contained inflation and Lula-led political pressure – all point strongly towards rate cuts this year given the exceptionally high real (inflation-adjusted) rates. However, the bond market appears to be priced for all this, and the overall fundamental picture for Brazil is not all bad news. Coupled with this, supply and demand dynamics are likely to weigh on the external hard currency debt market: the capitalisation necessary among state banks is likely to involve some US dollar issuance, while the domestic credit market is tightening and this typically encourages offshore issuance given the relatively attractive funding costs. Lula seems intent on driving growth through fiscal spending, which ultimately means weaker fundamentals facing debt investors.įor context, Brazil’s debt-to-GDP ratio – already higher than regional peers’ – is expected to increase by 10% over the next four years. It is the first point, fiscal risk, that is weighing most heavily on sentiment. Since the presidential elections, President Lula da Silva (Lula) has disappointed the markets on a variety of fronts: he has been more successful than expected at increasing fiscal spending his ministerial appointments are highly questionable and he has attacked the central bank and its autonomy. My trip confirmed that the mood on the ground in Brazil is deeply pessimistic. Let’s do this.Brazil: bearish on Lula’s fiscal direction, but this is in the price It’s time to transform the future of water. Today, our entrepreneurs provide water solutions to over 1.1 billion people and counting. In fact, we’re already building it: every entrepreneur, every startup, and every new solution gives us another way forward. We see that future clearly, and we can make it real. Better health, and better lives, for people around the world. ![]() More access, more equity, more community. We’re creating a more connected, effective water sector that attracts more dreamers, doers, and dollars.įrom there, anything is possible. When we back the best entrepreneurs in water, we go all in-from idea to implementation. That’s because we’ve seen what’s possible as solution seekers and builders. We approach water issues with optimism, curiosity, and entrepreneurial grit. Worry.īecause the problems surrounding our planet’s most precious resource-water-can be solved by our most precious human resources: ingenuity, commitment, and action. The future of water is often framed in the negative.
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