Edge Capital Research Team
Brazil experienced rapid economic growth in 2010 and secular changes are occurring within many aspects of society. This combination has created a set of challenges for the world’s seventh largest economy. Some of the challenges that we examine in this paper will be short term in nature and have identified solutions. Others will be long term and require a strong, coordinated effort over an extended period of time in order to solve. We visited Brazil to understand whether any of the challenges we identified are capable of undermining the increasing consumption power of the lower and middle class – a secular shift that has been the premise of our investment thesis. We returned from our visit with continued optimism that the long-term growth story is still very much alive but realize that all good growth stories have bumps in the road. Challenges create financial market opportunities and our responsibility as investment advisors is to determine if the opportunities can be monetized and if so, how.