Why Brazil?

Why Brazil

Brazil: Exceptional Growth and Opportunity

Brazil is one of the BRIC countries (Brazil, Russia, India, China). It is the only one to have a full democracy and low risks of war, terrorism and natural disasters.

While comparing to other BRICs we have to agree to Jim O’Neil, who coined the term BRIC, that Brazil outshines the others. (NPR- Decemeber/2011)

Russia’s population is old and shrinking and they depend almost exclusively on Oil and Gas. No middle class. No consumer market. Only a handful of mafia linked billionaires living the life of demigods and the rest are peasants.

China also has an aged population (demographic deficit). Not only they are a melting pot of different cultures and languages  (296 languages) but their dictatorship govt.  and lack of civil liberties lead experts to believe that when enough Chinese people are middle class, the country is bound to revolution and likely to separate in several independent smaller countries, each with their own language.

The same dangers of civil war, separatism, hostil neighbors and fundamentalist terrorism are a permanent threat to India (with its 1,546 different languages and cultures competing for the scarce resources)  on top of it, they have very little natural resources sustain their economy. And their population keeps growing and will pass China’s soon.

In fact, that part of the world will have over half of the world’s population soon, with not much to feed and support them.

That’s where Brazil comes in. Huge natural resources (Soy, orange, minerals, Oil, meat, chicken, ethanol, coofee, biodiesel, sugar, airplanes, cars, TVs, cellphones, you name it. Brazils is among top producer of them all.) a demographic bonus until 2050 ( that means that our population is so young that until 2050 we will have more people working and boosting the economy than people collecting pension – think USA in the 50’s), and a huge internal consumer market of 200 million people, most of it middle class and higher. (not to mention the big ascendence ( or soft power) it exercises all over the world today creating new markets for Brazilian goods everywhere in the globe ( or you haven’t tried Brazilian barbecue “rodizio”, drank a caiprinha, bought a pair of havaiana sandals, ate some amazon Acai or even danced to Brazilain samba or eorn a brazilian soccer jersey ?)

In fact, in the world we are living today, if you drink budweiser, eat at burger king or buy Pilgrim’s pride, you are actually buying from Brazi and you didn’t even know about it.

Brazil was recently the 10th largest economy in the world and is now number 6 growing rapidly and having passed the UK just before Christmas 2011.

Morgan Stanley Capital International recently reported that Brazil has become the world’s biggest emerging market on the MSCI index, displacing China. (Brazil moves to top of emerging market index – Brazilian-American Chamber of Commerce, Inc. Feb 29, 2008)

The recent discoveries of major oil reserves have put Brazil among the  world’s “top 10” oil producers and more than half of the cointry’s surface has yet to be explored for Oil and Gas.

Brazil’s GDP grew 5,2% in 2008 and 5,4% in 2007 and in 200, Brazil had the 6th best result among G29 but still cecreasedo.2%. During these three years the world was suffering from the Subprime Crisis.in 2010 we recovered well groeing 7,50% and another 2.7 % in 2011. 2012 is expected to be around 5%.

Brazil is the world’s largest producer of sugar cane (Ethanol), coffee, tropical fruits and orange juice, the second largest producer of soybeans and poultry and has the largest cattle herd in the world (50% larger than the US).

Brazil’s benchmark fixed lending rate has fallen from 21% in 2005 to 12.5% in 2007 and to single digits for the first time in history, reaching 9,5% on the 10th of June of 2009. Today, May-2012 it is at 9% and is excpected to end the year at 8,25%.

Brazil’s successful social program “Bolsa Familia” adopted by Lula’s Administration has taken more than 30 million people from poverty thus increasing Brazilian’s middle class and internal demand for consumer products and Real Estate.

Brazil has also built up foreign reserves of over US$370 billion, further insulating its economy from recent global financial tremors. Brazil has actually paid off its foreign debt and since 2008 has been lending money to the IMF to help rescue European countries from the crisis.

Foreign investment in new construction and real estate projects in Brazil jumped 35% to US$2 billion in 2008, the fastest expansion in three years. Starting in mid-2005, more that 25 Brazilian real estate companies have debuted on the Brazilian Stock Market, raising more than R$17 billion. According to the Sao Paulo Stock Exchange, foreign investors bought nearly three quarters of the shares on offer.
The recent availability of 360 month mortgages (previously 60 months), record low interest rates and rising wages have led to record mortgage borrowing, and government guarantees for low-income homebuyers are making low cost homes attractive. These Mortgages are done not only by the public banks but also private banks such as HSBC, Santander, Bradesco.

The housing deficit in Brazil is estimated at 7.9 million units. The state of Ceara in Northeast Brazil has a deficit of 420,000 homes of which Fortaleza, the capital city of the state, has a deficit of 154,000 homes.