Brazil is gradually changing its image of parties and palm trees. Yet one idea is sticking: that Brazilians – as supposed fun-lovers – would rather spend than save. The country has a savings rate of around 15 per cent of GDP, the lowest of Latin America’s emerging markets.

So Capital Economics implores, in a note published today, that “the over-riding priority for Brazil’s new president must be to raise the level of domestic savings”, especially by ensuring more state revenue goes on investment.

That would means sharp reductions in pensions – unless a foreign source of investment can be found instead. Continue reading »