Brazil attracts foreign capital amid high interest rates and economic resilience, says Goldman Sachs.

247 - O jornal Valor Econômico highlighted on Tuesday (26) the analysis of John Waldron, non-executive chairman and operational vice president of Goldman Sachs, who was in Brazil to celebrate the bank's 30 years of operation in the country. According to the executive, the combination of high real interest rates and the resilience of the Brazilian economy makes the local market highly attractive for the entry of foreign capital.

In an interview with the publication, Waldron stated that Goldman Sachs has evolved from a small office with three employees to a robust operation with 450 professionals in Brazil. He emphasized that the country benefits from a "supercycle of investments" in areas such as infrastructure, renewable energy, decarbonization, data centers, and semiconductors, sectors driven by advances in artificial intelligence.

Capital flow and Brazilian attractiveness

According to Waldron, a large portion of these investments will come from the private sector, given the high levels of government debt following the Covid-19 pandemic. “We see capital flowing [to Brazil]. In part, that’s why our business is doing well here, because we are an intermediary for global capital that wants to enter the Brazilian market,” he stated. He believes the country’s economy “has proven quite resilient, with reasonably high interest rates and high real rates of return. Therefore, it is an attractive place to allocate capital.”

The executive also reported that investors are showing cautious optimism, but are monitoring three points of concern: fiscal policy, high interest rates, and trade relations between Brazil and the United States. "There is cautious optimism that the fiscal situation may improve and interest rates may fall. And that the relationship with the US may strengthen again," he said after meetings with officials and investors, including the president of the Central Bank, Gabriel Galípolo.

Trade wars and international relations

When questioned about the tariff war waged by US President Donald Trump, Waldron avoided direct criticism but highlighted Brazil's ability to diversify its trading partners. "Brazil has attractive resources and a very strong domestic economy. The relationship with the US is important, I wish it were stronger, but I think Brazil will have multiple partners, so it won't align itself exclusively with the US or with China," he analyzed.

View on US interest rates and Goldman's role.

Regarding the US economy, Waldron assessed that the Federal Reserve should resume interest rate cuts in September, possibly by 0,25 percentage points, but the market is already discussing larger reductions. He emphasized that there are signs of weakening in the American labor market, with inflation still high, but more stable.

Despite speculation about a possible succession to David Solomon at the global helm of Goldman Sachs, Waldron downplayed the issue. “David [Solomon] has a job. I have a job. Our job is to make Goldman Sachs more valuable, more resilient, more able to serve our clients, and that’s what he and I are focused on,” he said.

Established presence in Brazil

Although it does not disclose detailed figures for its Brazilian operation, Goldman Sachs considers the country one of its main platforms outside the major global centers. Waldron compared the operation in Brazil to the bank's structure in Singapore and highlighted that Latin America has already become one of the largest growth regions. According to him, the success of the operation depends on the ability to remain both local and global at the same time, with long-term persistence.

The executive also noted that, even with stock issuances on hold, there is strong international interest in mergers and acquisitions in Brazil, especially from global investors seeking stakes in national companies. "If you are a global asset allocator and believe the economy will be relatively resilient, this is a very attractive place," he stated.