Investment from abroad is welcome. Equal treatment is given to local and foreign investors. Practically all sectors are open to investors. Profits and capital can be repatriated without restriction. There is a good labor pool and good private sector partners available.
Brazil is not only the largest economy in South America, but it is also one of the ten largest economies in the world. A stable political system, falling unemployment, low inflation, firm currency and strong economic growth have all attracted significant foreign investment into the country and stimulated the development of major real estate projects.
Significant government investment in the country’s infrastructure, thriving tourism, beautiful scenery, exciting culture and reasonable prices are only a few of the many factors that contribute to the attractiveness of investment in the Brazilian property market.
Unique Investment Opportunity
Brazil genuinely offers a unique investment opportunity. It is the fifth largest country in the world covering nearly half of South America having an area of 85 million square kilometres and over 7,300 km of coastline. Brazil is famous for its rainforest which is renowned for its distinctive and unique habitat and the north-eastern coast, which is a series of undulating dunes and cliffs with breathtaking scenery and beaches ranked among the best in the world.
Brazil is free from hurricanes, floods, storms, earthquakes and tsunamis. The climate is quite varied; in the south, the weather is subtropical with heavy torrential rain while in the northeast, it is dry with a higher temperature, a gentle sea breeze and over 300 days of sunshine a year.
|Population growth rate:||0.98% (2008 est.)|
|Government type:||Federal Republic|
|GDP growth rate:||4.5%|
|GDP per capita:||$9,700|
|Labour workforce:||99.47 million|
|Current account balance:||$10 Billion|
The Brazilian economy is the biggest in Latin America and the microeconomic conditions have never been as promising for investment as they are today. A recent study by the World Bank now ranks Brazil as the 6th largest economy in the world and reported that the Brazilian economy has remained stable as a result of prudent macroeconomic management, firm fiscal and monetary policies and good debt management.
The Brazilian government has over the last few years successfully adopted effective macroeconomic policies that resulted in controlled inflation, improved productivity, positive balance of trade, large international reserves, stable currency and impressive export performance. It has also implemented programs that improved fiscal control, significantly encouraged investment and enabled a steady reduction in the prime interest rate over the last few years to a level that supports a sustainable economic growth.
The rate cuts of the past five years brought down the policy interest rate (SELIC rate) from over 20% to just over 11.00%. Last year, Brazil’s Central Bank gained further confidence when it decided to temporarily pause the series of consecutive rate cuts in its last meeting to assess the impact of passed rate cuts and other macro-economic stimuli. The growth in the economy has also resulted in reduced unemployment and an increase in average earnings. This growth is expected to continue, according to the OECD (Organisation of Economic Cooperation and Development), which predicts a Brazilian GDP1 growth rates above 4 % in the next three years. This is well above the ten year average of 2.5%.
There has been a steady reduction in the prime interest rate over the last few years to a level that supports a sustainable economic growth.
The Central Bank of Brazil has reported that conditions were favourable for continuing growth and stable interest rates with no apparent threat of inflation because of supportive exchange rate trajectory and as the various economic indicators are below inflationary levels.
With strong economic expansion, stable currency and nominal interest rates falling to record lows, the consensus is for continued growth. Deutsche Bank predicts that the Brazilian financial and economic outlook remains strong due to the improved economic stability and declining interest rates. The Brazilian government efforts have been applauded internationally with the OECD reporting that considerable progress has been made in recent years in achieving macroeconomic stability and restructuring of the Brazilian economy. Productivity has risen and the implementation of a series of structural reforms has been successful. In 2007, Standard and Poor’s rating services raised its Brazil long term sovereign credit rating and long-term local currency credit rating. Confidence of foreign investors has increased considerably as the economy has shown strong, stable and sustained growth over the last few years which resulted in FDI (Foreign Direct Investment) pouring into the Brazilian economy at unprecedented rates and is expected to continue in the foreseeable future as all economic indicators point towards sustainable and robust growth.
The Brazilian agriculture and farming industry has also attracted significant international investment.
While private bankers and investment funds have been buying aggressively in the Brazilian stock and bond markets creating considerable demand for the Brazilian real which has doubled in value against the dollar over the last five years.
Foreign Direct Investment
FDI (Foreign Direct Investment) pouring into the Brazilian economy at unprecedented rates and is expected to continue in the foreseeable future as all economic indicators point towards sustainable and robust growth.
The Brazilian currency has been one of the best performing currencies in the last couple of years which has assisted in the reduction of interest rates and the improvement of export revenue from the sale of Brazilian commodities and agricultural products.
The rising Real has also enabled the Brazilian Central Bank to build up its foreign currency reserves to record levels which has provided further support to the Brazilian currency. A survey based on data from the International Monetary Fund (IMF) shows that 2007, was a year of records in Brazilian foreign trade and FDI. Brazil has accumulated more dollars than any other emerging country in the world with its Foreign exchange reserves jumping 110.77% – the equivalent of $ 94.7 billion.
Brazil has accumulated more dollars than any other emerging country in the world with its foreign exchange reserves jumping 110.77%.
Brazil has not only paid its IMF and Paris Club debts, but also continued to buy back its external market debts while eliminating the dollar component of its internal debt. The Brazilian Treasury reported continuing fiscal and current account surpluses and reserves six times higher than a year’s worth of external market debt repayments.
With all these positive developments, Brazil was able to issue bonds in its national currency, the real, for which demand has wildly exceeded supply, enabling billions of dollars to flow into the country.
This surge in financial market activity has resulted in increased private sector bank lending and a surge in domestic private bond issuance with domestic Brazilian corporations being able to tap into the international bond and loan markets because of much lower country risk factor, resulting in even better growth prospects and economic prosperity.
Brazil has a wealth of natural resources and because of favourable agricultural climate and massive areas of rich fertile agricultural land, it is a world leader in the production and trade of many important commodities such as ethanol, coffee, soybeans, oranges and sugarcane. The recent sharp increase in commodity prices and the integration of China, a major buyer of commodities, into the world economy have provided a further boost to the Brazilian economy and balance of trade.
Looking at long term growth, a Goldman Sachs study predicted that Brazil will be one of the top five economies in the world by 2050 and Deutsche Bank confirmed that on the long run the demographics of Brazil favour strong economic growth because of the predicted increase in its working population. Fabio Kanczuk, professor of economics at the Universidade de São Paulo said that Brazil will be attracting large investments from companies interested mainly in the domestic market and the Times newspaper reported that several leading UK city financiers recommended Brazil as it represented very good value for investors.
Brazil has it all but it’s not until recently that it has been discovered by foreign investors. The number of tourists visiting Brazil has increased considerably from about 2.5 million in 1997 to over 9 million today. The relaxed pace of life, warm climate and absence of wars or political threats are attracting investors and holiday makers to Brazil like never before. Brazil reveals an incomparable diversity of landscape and culture and many attractions that make Brazil a top tourist destination.
Brazil caters for all tastes from lively and fascinating cities to amazing night life, exceptional festivals, interesting wildlife, beautiful beaches, great outdoors, quiet and charming rural villages as well as friendly and most pleasant population.