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Brazil facing a bleak economic outlook, says hedge fund boss

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Despite increases in the the price of commodities helping Brazilian assets lead global gains this year, one of the country’s biggest independent hedge funds is predicting that there may be trouble ahead, according to a report by Bloomberg.

With Brazil’s next presidential election is looming large in October this year, Legacy Capital Gesture de Recurso Ltda, whose Legacy Capital FIC fund has outperformed 97 per cent of peers this year, says that whoever wins will face a bleak outlook for Latin America’s biggest economy.

The report quotes founding partner Felipe Guerra as saying that Brazil is facing so many problems – high interest rates, low growth and deteriorating public accounts – that the outcome of the vote will be irrelevant and whoever wins will inevitably succumb to populist pressure to increase the country’s deficit resulting in future tax increases.

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