Market Focus: Brazil

The Brazilian economy has been predicted to become one of the five largest in the world in the decades to come. In the last 15 years, the country has pursued a strategy of export-led growth and regional integration. The economy is relatively well diversified with a strong manufacturing and agricultural base. But economic activity is still concentrated in the southeast, particularly in the state of Sao Paulo.

ECONOMIC OUTLOOK
Brazil's economy slowed unexpectedly, growing by 0.6% in the three months to September versus the previous quarter. Growth for 2012 now looks set to be closer to 1%, compared with 2. 7% last year and 7.5% in 2010. President Dilma Rousseff launched the first  in a series of measures aimed at injecting up  to $50bn (£32bn) into the economy over the next five years, and increasing the private sector's role in the economy. The plan included privatising about 14,000km of railways and roads, followed by selling ports and lowering energy costs.

TRADE OUTLOOK
Latin America, China and Europe are expected to be Brazil's top exporters over the medium term. Trade with Asia (excluding Japan) already accounts for more than a quarter of Brazil's merchandise exports. The continued rapid industrialisation of these Asian economies is expected to drive further demand for raw materials from Brazil in coming years. China and Vietnam will be the fastest-growing export destinations over this period, ensuring that China retains its position as the  most important destination for Brazilian export s. 40% of Brazil's imports arrive from Europe, followed by 16% from the  US and China.  The UK falls behind Germany, India, Mexico, Nigeria and Chile, with only 1.7% of imports.

OPPORTUNITIES

The fifth-largest country in the world, it has one of the world's most rapidly developing economies and a GDP per head greater than either India or China. Certain sectors of the Brazilian market have experienced higher than average growth, such as air transportation, telecoms, oil and gas, and mining. Under the second phase of the Growth Acceleration Program the Government of Brazil will spend around US$470 billion in development of the country's energy generation and infrastructure as well as stadiums as it prepares for the World Cup in 2014 and the Olympics in 2016. Other promising areas include construction, aerospace and aviation, electrical power, safety and security devices, environmental technologies, retail and transportation.

 

SWOT ANALYSIS

STRENGTHS
World's sixth largest economy
High population
 

WEAKNESSES
Corruption
Political risk 
 

OPPORTUNITIES
2014 World Cup, 2016 Olympics
Growing middle class
Manufacturing

THREATS

Export driven economy

Real currency

Very high interest rates                  

 

 

Share this

Gold Patrons & Strategic Partners