1 May 2014
As a BRIC (an association of five major emerging nations), Brazil is one of the world’s most rapidly developing economies. Rebecca Evans from serviced apartment provider, SilverDoor, finds out why Brazil is seeing such a surge in growth.
By hosting the 2014 FIFA World Cup and the 2016 Olympics, Brazil has the perfect opportunity to show the world how far the country has come. As the largest economy in South America, Brazil is the UK’s largest trading partner in Latin America.
Surprisingly, the country is already outgrowing its emerging market status and becoming one of the richest and most developed nations in the world. So what are the benefits of being an emerging market? It not only drives global growth but also provides diversification, as it tends to perform differently to developed markets. This is due to the speed of their growth and the fact that emerging markets are unburdened by the history of business processes that may be inflexible and outdated.
Brazil’s human, mineral and agricultural resources are said to match that of North America, but the country’s major industries include: banking, aerospace and defence, steel and cement, beverages, chemicals, motor vehicles, engineering and machinery. Brazil has enough oil and natural gas reserves to be self-sufficient, with a huge amount set aside for export. As the leading ethanol producer, and with more fresh water than any other country in the world, Brazil has plenty of resources to rely upon.
As well as opportunities to export, project work has increased dramatically for the upcoming World Cup and Olympics, driving the demand for improved infrastructure. The ‘Growth Acceleration Plan’ aims to increase the country’s energy capacity, build two million new homes and develop the infrastructure. Investment will facilitate future economic growth and allow the economy to function at its highest capacity. This is highlighted with the high-speed rail service that’s being built to connect Brazil’s two largest cities, Rio de Janeiro and São Paulo; supplying thousands of jobs and creating demand for resources.
In the last five years, 30 million people have become part of the middle class and the demand for a higher quality of life has accelerated in Brazil. Modernised buildings, accessible roads and improved sanitation are now basic requirements, and the demand for consumer goods has increased tenfold. Restructured importing systems and investments in technology have made it cheaper and easier for foreign countries to sell their products in a country where it was once notoriously difficult; encouraging international trade, foreign investment and relocation.
Despite a thriving and diverse economy, interest rates are currently extremely high. The Brazilian government is acting fast to ensure inflation slows and they’ve managed to keep it down to 4.5 per cent in 2014 – the previous year saw a hike in consumer prices to 5.68 per cent. Rate hikes and swap auctions by the central bank have provided resilience to the currency and the Brazilian real has climbed highest amongst the emerging markets. Business in Brazil is booming and it’s only the start. With so much going on, are you ready to invest in Brazil?