There used to be a saying about Brazil, it is the country of the future… and will always be… But it appears that now the future of the Country has arrived.
Recently profiled as the “World’s Next Economic Superpower,” there does not to be anything, not even a world economic crisis, that can put a stop to the country’s growth. The rising middle class, the strong demographic of growth, a stable financial environment and both a public and private commitment to infrastructure and financial investment have laid the foundations to a future that some thought would not arrive.
Over the past 3 years, 45 million Brazilians moved into the middle class. And, with their ascent into the new social stratum came a world of consumer opportunity. These new classes “C-ers” are buying everything from cell phones to refrigerators, they are using the internet more frequently than previous “C-ers” and they are buying homes for the first time in their lives. This rising consumer class is expected to be a driving force to the strength of the consumer markets.
In addition to a rising middle class, Brazil is expected to benefit from what is being called the “demographic bonus” which is to say that the current youthful population is expected to mature over the next 20 years. The average age of 29 is expected to increase to 34 in 2020 and to 38 by 2030 – a similar transformation to what previously took place in the United States.
According to leading economists Cássio Turra and Bernardo Queiroz of the Federal University of Minas Gerais, Brazil has the potential to grow 2.5% per year exclusively as a result of this demographic bonus.
The strong consumer economy is expected to be supported with stable economic policies. For the second time in 2 years, Brazil has been upgraded by the rating agencies. Early in April 2011, Fitch gave the nation a BBB rating, up from BBB -, their lowest investment grade. Brazilian Finance Minister Guido Mantega has said that this rating reflects the solidity of the Brazilian economy.
To support this growth, Brazilians in both the public and private sector are aware that massive investments in infrastructure are needed. Both the government and private institutions are investing heavily in the future of Brazil.
In São João da Barra, for example, Brazil’s richest investor is constructing a superport, LLX, a project which is estimated to have a budget of 3 billion reais, and is just the tip of the undertaking. Other investments include hydroelectric plants, railways, highways and ports.
As Brazil settles into its role as a key player in the global economic scene, no longer is the question, “should we enter Brazil?” Rather, it is clear, “What does it take to win?”
Source: Investment in Brazil / KPMG – 11th edition
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