Strong survey data, Brazil’s tax reform

The batch of recently-released survey data for June from Brazil and Mexico suggests that both economies gathered momentum at the end of Q2. But we doubt that this will be sustained and expect growth in both countries to weaken over the rest of this year. Elsewhere, the approval of a long-awaited tax reform bill by Brazil’s lower house of congress this week could help to lift one constraint on productivity growth. And, taken together with the recently-introduced fiscal framework, it indicates that the more business-friendly parts of government and congress are making their mark.