By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – Despite the current political turbulence in Brasilia, Brazil’s main stock market, the Bovespa Index (IBOVESPA), registered a record volume for the second day in a row on Tuesday, closing a little below 75,000 points.
For economic analysts, the latest economic data has led the São Paulo bourse to register its highest volumes since 2008. The ongoing political crisis, however, may affect Brazil’s economic growth.
“Recently released data indicates that GDP grew for the first time in over three years in Q2, confirming that the [Brazilian] economy has turned a corner,” said Angela Bouzanis Senior Economist at FocusEconomics in the consultancy’s latest outlook report.
According to Bouzanis the increase of consumption spending, falling inflation and export growth brought about a turnaround in Latin America’s largest economy and is chiefly behind the region’s recent growth acceleration.
The consultancy however warns that the fragile political environment may threaten the country’s recovery, despite a positive data. “President Michel Temer is likely to face another corruption charge in the coming weeks, which could push reforms to the back burner,” stated Bouzanis in the report.
The upcoming testimony to be given by former President Luis Inacio Lula da Silva on Wednesday related to corruption charges and the possibility that incumbent President Temer will be again the target of an inquiry in the Supreme Court in coming days led the Ibovespa to lose some of its strength at the closing bell. The index has accumulated gains of 23 percent in the first eight months of the year.
Analysts fear that the continuing political turbulence may make it harder for Congressional lawmakers to approve the much-needed reforms like social security and hinder its massive privatization plans.