Consumer Confidence Makes A Comeback

Brazil's consumer confidence index, as measured by the Fundação Getulio Vargas institute, has made an astonishing comeback in the second quarter of the year, bouncing from 97.6 in April to 106.4 in June. This takes consumer confidence in Brazil firmly above the key 100 mark, suggesting growing optimism among households on future economic conditions. The index fell below 100 in November for the first time since the survey began in September 2005, only briefly pushing above this level in December. We believe that this is a significant development, further underpinning our view that the recovery phase of the Brazilian economy may already be well underway, with private consumption demonstrating remarkable resilience during the first quarter of 2009. We are holding to our projection for a 0.6% real contraction of the economy this year, and expect the economy to bounce back strongly in 2010 to 2.0% growth.

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