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Brazil's economy, by far the biggest in Latin America, faces a brighter future after several difficult years. Consumer demand and investment will help Brazil post performance outpacing the rest of the region this year while the politics are finally left behind.

Jair Bolsonaro will take the reins of Brazil’s economy on January 1, after winning 55 percent of the vote in the second round of the presidential election held October 28. The congressman and former army captain will be the country’s first right-wing president in almost 15 years. Markets reacted positively to the news, with the Bovespa Stock Index hitting a record high and the Brazilian real strengthening the day after the election.

Next year, the recovery should gain steam on the back of improving labor markets and robust fixed investment. Keeping the country’s finances on a positive trajectory is key to the country’s long-term outlook and Bolsonaro’s pledge to pursue fiscal consolidation should keep growth on track. GDP is projected to grow 2.3 percent in 2019 and 2.5 percent in 2020.

In early November, an amendment was presented to the Provisional Measure, which deals with tax incentives to the automotive industry to improve the energy and environmental performance of vehicles manufactured and imported in Brazil, also known as ROTA 2030.

This amendment extends the tax incentives for electric and hybrid vehicles. Automakers in Brazil already have plans to launch flex hybrid vehicles in 2019 and 2020 and take advantage of the existing ethanol distribution infrastructure. With this measure, Brazil definitively enters the hydrogen/ethanol age, generating employment and income throughout the country. The amendment finally levels the playing field for electric hybrid vehicles.

As you think about opportunities in the automotive industry in Brazil, this will be an area of growth with high local demand and regional exports.

For more information about Brazil, please contact our AMT Brazil staff at aarbex@AMTonline.org.