Investors seem confident that an economic recovery is under way

AFTER a grinding two-year recession, the longest in Brazil’s history, a recovery has been slow to materialise. The IMF expects GDP growth of just 0.3% this year. The joblessness rate is 13%. Last year’s fiscal deficit, including large interest payments, was nearly 9% of GDP. Lower-than-expected tax receipts have forced the government to accept that for the next four years the budget deficit will be higher than planned.

But markets seem unperturbed. The Bovespa, Brazil’s benchmark stock index, is back at levels not seen since May, when a leaked recording of the president, Michel Temer, apparently discussing bribes threw politics into chaos and put his future in doubt. The Brazilian currency, the real, strengthened by 6% in July.