Otaviano Canuto dialogues with CNN Espanols Gabriela Frias during a World Affairs Council of Atlanta event Wednesday night.

Brazil’s new president has been called a “tropical Trump” for his often-offensive rhetoric and the way he energized the electorate against the status quo. 

And for at least one prominent economist, Jair Bolsonaro should follow the U.S. president’s lead and “build the wall” — around the country’s public finances, that is.  

Otaviano Canuto, a retired vice president and director at the World Bank Group, said Brazil has a chance to right its off-kilter fiscal ship by passing a much-needed but often contentious pension reform. 

That’s the foundation, he says, that could underpin Mr. Bolsonaro’s broader agenda of opening Brazil’s economy further to foreign investment, improve its business environment and privatize some state assets. 

Mr. Canuto spoke during an unusually passionate economic forecasting event put on by the Brazilian-American Chamber of Commerce Southeast at the Federal Reserve Bank of Atlanta Wednesday morning, then addressed a World Affairs Council of Atlanta audience in the evening. 

The flipside of Brazilian optimism, he said, is that it has already been priced into the markets, meaning the hit from a failure will be greater than a boost from success.

“Of course, we’ve see what happens when financial markets are so enthusiastic and the country does not deliver for investors,” he said. “But if confidence is boosted, I would say that I haven’t seen in my 63 years … a window of opportunity for lifting the growth rate in a sustainable way like this one.” 

Mr. Canuto’s remarks came on a day when the eyes of the world were on Mr. Bolsonaro at the World Economic Forum in Davos, Switzerland

The new president sought to assuage investors’ fears and show that he was turning over the management of his aggressive economic and security agenda to competent technocrats who wouldn’t be beholden to partisan interests. (In the same speech, however, he said “leftism” would never again rule South America.) 

Mr. Canuto said it’s important to note that Mr. Bolsonaro’s election with a broad mandate provides some political oomph behind reforms kick-started under Michel Temer, who took over as president for an embattled Workers Party President Dilma Rousseff in 2016. 

Ms. Rousseff had been impeached for misusing state funds amid a sweeping investigation called Operation Car Wash (“Lava Jato” in Portuguese) into corruption in the awarding of contracts by Petrobras, the state-owned oil company. 

The fact that the investigation netted so many politicians including former President Lula Inacio da Silva, should have an eventual impact on corruption in Brazil, especially as stiffer penalties are enacted, Mr. Canuto said. 

Tackling corruption is a key platform issue for Mr. Bolsonaro, who has also vowed to relax gun laws in an effort to help Brazilians better protect themselves against violence. 

Not Really Trumpian

Beyond his social stances, Brazil’s new president is far from Trumpian. Where the U.S. president strives for an America First approach, Mr. Bolsonaro is looking to open up the notoriously walled-off Brazilian market, Mr. Canuto said. 

Mr. Bolsonaro has realized that Brazil has to go back to the plurilateral, multilayer stand that it always took,” Mr. Canuto said. That’s the opposite tack Mr. Trump’s advisers have taken with China and key U.S. trade partners. 

Mr. Bolsonaro undertakes the task at a time when Brazil’s fundamentals are surprisingly strong given the political shocks of the last few years. 

The country is still a major recipient of foreign investment,, and projections put inflation for 2019 within the target range at about 4 percent. The central bank has some room to loosen cash requirements for banks to spur growth. Productivity gains are there for the taking with more corporate investment and infrastructure improvements.  

“The healing has been slow, but it has been taking place,” Mr. Canuto said. 

Land of Opportunity 

Where Brazil needs a lot of help is in its business environment. The country ranks No. 109 on the World Bank’s Doing Business index, an improvement on its previous position but still far from competitive for the size of its economy. An oppressive tax regime makes the country No. 184 out of No. 189 countries in that category. 

In the morning forecasting panel, investment banker Peter Leite, president of Hichens, Harrison & Co., took issue with Mr. Canuto’s statistics. The real rate of inflation for citizens and companies is much higher than 4 percent, and contracts can be virtually unenforceable, he contended. 

Still, for those who can navigate the market, Brazil is a “land of opportunity” especially in infrastructure and energy, he said. 

“We have all these problems, but you have rates of return in Brazil that you don’t have anywhere else in the world,” Mr. Leite said. “Brazil is not for amateurs.” 

The key is not ivory-tower academic theories, but “real-life reforms” that pave the way for increased foreign investment, he added. 

“Brazil still treats foreign capital as the enemy,” Mr. Leite said. 

Marcelo Bernal of Merchant e-Solutions, a Brazilian payment processor with North American headquarters in Atlanta, agreed that even now, investing in Brazil can be lucrative for those who work with the right people and the approach. 

As e-commerce takes off and loosens the hold of traditional banks on the payment sector, he sees potential for Georgia’s payments firms there.

“As the market becomes more and more foreign-investment friendly, I would expect a lot of the fintech companies here going and trying to attack some of that very interesting market that we have in Brazil,” he said, adding that Brazilian companies will come calling to invest in Atlanta-based fintech innovators. 

Nelson Mikovenyi, director of international finance at  Delta Air Lines Inc., sees untold potential in a country with one-sixth the airline passenger penetration fo the U.S. While praising the privatization of some airports, he too urged a more aggressive shakeup of the country’s regulations and a more open stance. 

“I think Brazilians in general tend to think regulations brings protection. In my opinion, regulation brings bureaucracy. If you want good products, you need competition.”

As managing editor of Global Atlanta, Trevor has spent 15+ years reporting on Atlanta’s ties with the world. An avid traveler, he has undertaken trips to 30+ countries to uncover stories on the perils...