The first headline states that Brazilian Industry, in the opposite direction of the World`s Average, has shrank 10%, from the years 2014 to 2018. The second one gives the report of the latest developments on the recent industrial production around here. A relatively small, but significant in a country that struggles to grow.
The political scenario is a turbulent one, together with a partial destruction of the recent measures against the Car Wash Operation, taken by (surprise…) the Supreme Court of Brazil, a cabal of self serving unelected justices that do all, except uphold the Constitution.
On the other side, a brilliant Finance Minister and an also brilliant president of the Central Bank promote the single most effective measure to boost the economy: to reduce the interest rates to relatively civilized rates (5%, or around 1.2% above projected inflation for 2019).
Friends and clients are becoming increasingly worried with the “Interest Rates Withdrawal Syndrome” (IRWS), as I call it. IRWS is the result of the relatively sudden withdrawal of high interest and insulated deposits, that at the end of the tragic Dilma Rousseff`s era were 14.25% p.a. and made everybody in Brazil comfortable with placing money in safe, liquid and highly lucrative game of lending Government our surpluses.
People is sick worried with the possibility of running risks, any kind of risk, for having a 5% return, or so, in something that is not a fixed rate deposit. I personally am used to it. I invest heavily in dividends-paying shares and other ventures, and despite some serious losses, such as in the case of Eternit (ETER3: B3) have always given me a minimum 4.5% tax-free dividend yield. They show up at our offices and ask “now, what?”. The answer is the same for them all: “now, do as everyone else does in the most serious and successful countries of this world and cure yourself of the IRWS. Choose a nice porffolio and invest in it; go to more risky variable-income operations, such as Company`s Bonds, Real Estate Funds, etc.
The most desired effect of the IFWS, nevertheless, is that it will throw money in the production sector. People will have to invest in productive activities, as in any civilized country. As with the hyperinflation of the 1980s and 90s, Brazil was the total exception. When the Real Plan came, we all of a sudden became used to “be normal”. Just that. The reduction of real interest rates is the “Second Real Plan”, but more than it, it have the ability, I think, of being the redemptive measure of a coutry addicted to government (our own) money.
P.S. Sorry typos and my (usual) English errors… I write too fast and correct nothing… my bad…