Here's a Q&A with the legendary emerging markets guru Mark Mobius, just in from NEWSWEEK's man in Rio, Mac Margolis. Pay attention--Mobius is known for dropping valuable pearls of market wisdom. As managing director of Franklin Templeton Investments, which has nearly $40 billion at play in the emerging markets, he knows that a few green shoots do not an economic spring make. But the rapid recovery of the Brazilian economy has impressed him. FTI now has some $5 billion in the onetime accidental economy, more than in China. Here’s why:

MARGOLIS: Do you share the opinion that Brazil is recovering from economic downturn much faster than expected and will post a respectable, 3-4 percent growth next year?

MOBIUS: Yes, we agree with the view that Brazil will resume to normal growth faster than expected. We are starting to see signs of bottoming out and recovery in the economy with net creation of jobs, increased confidence level, credit spreads coming down, and risk appetite supporting capital-markets operations

How much of a drag will the sluggish world economy be on the Brazilian recovery?

MOBIUS: Obviously, since Brazil is an important exporter of various products including commodities, the most affected sectors were those related to exports, and that will continue to follow the recovery of global markets. [But] the fact that Brazil continues to be more dependent on the domestic economy (it has a relatively low level of trade in relation to GDP) has helped the country to face this economic crisis better compared to other more open countries.

Do you agree that the country's conservative banking regulations and strict stock market oversight are part of why Brazil has avoided the worst of the financial crisis and is now on the path to recovery?

MOBIUS: Yes, we believe that the strict oversight from the central bank of the financial sector has helped the Brazilian market. Also, other factors helped. One is the fact that still a small percentage of the savings were in equities, so the wealth destruction was not as severe as what happened in other countries. Secondly, because the economy is more dependent on domestic demand, the global slowdown has affected Brazil less than it did other countries with more open economies. Third, there was room for monetary stimulus with a drop in interest rates and bank reserve requirements. This was the first time in history that the country was able to execute countercyclical policies to respond to a crisis. In past crises, the central bank needed to raise rates substantially to prevent money from flowing out of the country. Finally, it is very important to highlight that governments proved that institutions are solid in Brazil and regardless of the affiliation, ruling parties committed themselves to economic stability with no capital controls, with floating exchange rate, inflation targeting, and fiscal discipline. A strong indication of Brazilian economy resilience and external confidence has been the high levels of foreign-exchange reserves. They are even lending money to the IMF.