Mobius Says Brazil’s Economy Will Recover in 2016 Amid Reforms

Latin America’s largest economy will rebound next year as the Brazilian government reduces intervention and commodities advance, according to Mark Mobius.

The nation’s gross domestic product will increase as much as 4 percent next year after growing 0.3 percent in 2015, the executive chairman of Templeton Emerging Markets Group told journalists in Sao Paulo.

President Dilma Rousseff has appointed a new economic team led by Joaquim Levy to restore investor confidence after winning a runoff election by the narrowest margin of any president since at least 1945. Over the last three months, her administration announced tax increases and cuts in social programs.

“She knows that she has to do the reforms and change,” Mobius said on Monday. “In five years, this place will be much better.”

The policies adopted by former President Fernando Henrique Cardoso during his government were a good model for Rousseff now, Mobius said. During his eight-year tenure starting in 1995, Cardoso ended the monopoly in oil production, allowed private companies to operate telecommunication services and privatized state-owned companies such as Vale SA.

Mobius also said that a potential rebound in raw materials next year would also boost the Brazilian economy. The S&P GSCI index of commodities has tumbled 34 percent over the past 12 months amid a global glut.

About 4 percent of the $40 billion managed by Templeton’s emerging-market funds are invested in Brazil, according to Mobius. The firm currently favors assets in China and India, he said, without giving details.

Before it's here, it's on the Bloomberg Terminal.