The depth of Brazil’s recession has been blamed on everything from lower global commodity prices and tightening domestic credit conditions to poor infrastructure and excessive red tape. But this tendency to blame everything muddies the waters and makes it difficult to identify what might ultimately drive any recovery. The key point is that, while there are certainly problems on the supply side of Brazil’s economy, the primary cause of the slump has been a shock to demand. The early signs that demand is starting to pick up suggest that an economic recovery is on its way.
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