Brazil's moderate export gains could help investment bottom out, but not recover

Brazil is expected to post its strongest real exports growth in five years in 2015, as currency depreciation boosts competitiveness. Given the rising correlation between exports and investment demand.

"We expect the slightly better exports outlook to eventually feed into the investment and growth outlooks. However, the persistently challenging global demand environment is likely to contain the exports gains for the time being", notes Societe Generale.

 Meanwhile, the domestic demand challenges have grown large enough to outweigh any advantages that the trade improvements can fetch on the investment front.

"We think it unlikely that the export gains will trigger a strong enough investment cycle to pull growth back up towards potential any time soon. The trade and industrial production numbers over the next few months could provide an indication on the possible timing of a trough in investment demand. However, they are unlikely to signal a strong recovery", says Societe Generale.