Which Central and South American countries are surprising in terms of growth and performance?
We continue to be pleasantly surprised by Brazil. Its fiscal deficit is declining, annual GDP growth, which was negative during 2016 for example, is projected to be between 2% and 3% over the next several years, and credit growth continues to pick up. Furthermore, we're seeing greater transparency in the corporate governance sphere and government commitment to structural reforms, both of which have begun to attract outside investments. For instance, Brazilian corporates like Embraer, Braskem and Eletrobras are all in discussions for partnerships or to receive investment from developed markets blue chip companies. While Brazil has long been a top pick of ours, the speed of its economic turnaround and strong performance of its assets have exceeded our own expectations. In Central America as a whole, asset performance has been robust. We expected the economies of the Dominican Republic and Costa Rica, for example, to remain healthy, but we worried that the re-negotiation of NAFTA could create a ripple effect that would slow growth in other Caribbean and Central American economies. However, change in trade policy has so far been muted and that has allowed for solid asset-price performance across the region.
Is there similar performance and growth in Africa?
In Africa, we're seeing green shoots of recovery in Nigeria after a fairly deep recession. The government's economic recovery plan-with a very strong focus on infrastructure spending-has led to tangible improvements. Also, the price of oil has averaged $68 year-to-date, and the country's production is back up to 1.8 million barrels per day. That activity is pushing Nigeria's current account into a surplus position and strengthened the case for strong performance of its assets. South Africa's economy has performed extremely well despite having undergone a change of leadership this year. The Zuma era was very much characterized with slow growth, lack of fiscal discipline and rampant corruption. While it is too early to see if the new President Ramaphosa's administration will be able to kick-start growth, but the early indications are positive.
Views are as of April 19, 2018 and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector. Past performance is no guarantee of future results.