Despite dramatic drops on the Bovespa; and the Real closing on Wednesday at  R$2,28 against the dollar, after strong intervention (including the selling of dollars for the first time since 2003) by the Brazilian Central Bank, the economy is well set up to avoid the worst of the global financial crisis, argues Jonathan Wheatley of the Financial Times.

In spite of the extent of panic selling this week, many economists still expect Brazil to emerge relatively unscathed from the global financial crisis. Its banking sector underwent a state-sponsored restructuring in the 1990s and has little of the exposure to troubled assets afflicting US and European banks. Only about 10 per cent of bank credit is raised outside Brazil.

On Wednesday 8 October the IMF forecast 2009 Brazilian annual growth rate of 3.5%. Charles Collyns, Director of IMF Research stated that a slowdown in growth and weakening of the Real willl present the Brazilian Central Bank with the opportunity to bring interest rates down.