Where to Invest Next: Skip China, Go Brazil!
Slowly but surely, Brazil is becoming one of the fastest growing economies and a major force among emerging international markets. It is the only one of the BRIC countries (Brazil, Russia, India and China, all countries that are considered to be at similar stages of advanced and fastest growing economies) that not only survived the global economic crisis, but actually managed to become even stronger than before. It dominates the South American market and according to the World’s Bank it is expected to become the fifth-largest economy in the world by 2016.
Brazil has some great opportunities and is about to become a playground for major players of all fields in the next five years. The only thing that prevents expansion is working capital. Due to this potential, foreign investors are already starting to shift their attention to Brazil.
Tourism
Brazil is schedule to host the 2014 World Cup and the Olympic Games at 2016. These two events will boom its economy on many levels: infrastructure, tourism, energy, logistic, retail and production of steel, iron and cement. A couple of years ago, the Brazilian government decided to exempt projects in the tourism sector from different taxes and fees and to lower its interest rate one percent. The Brazilian government is trying to enhance foreign investment in the tourism sector and is making it easier than before to invest in the hospitality sector, hotels, restaurants and clubs. Foreign investors are already jumping on the opportunity and the Brazilian government reports on an increase of hotels purchases by European investors.
Real Estate
With its economy going global, Brazil is considered a viable property investment option. With such good currency exchange rates, it is considered extremely cheap for foreign investors. It also offers low property maintenance costs, beautiful coastline property and it is one of the few countries that allow foreigners to own property in their own name. Brazil’s purchase power is just waking up after decades of very slow development and as a result, there is more property than prospective buyers and more properties are being built each year.
Natural Resources/Industry
Brazil has the advantage of natural resources. When it comes to oil, water, energy and iron, it is more independent than China, the US and most of the countries in the world. It has more water than any other country in the world and since water is becoming the new oil and the most important commodity, Brazil much stronger today than before. Brazil is also a major oil supplier and its oil company, Petroleo Brasiliero (PBR) is one of the strongest providers of oil in the world and in fact, imports oil to the US. Brazil also has iron as a natural resource. Its iron ore company, Vale, is one of the largest mining companies in the world and the world’s largest producer of iron. In addition, Brazil has a world-class biofuels industry based on sugar cane and ethanol production. At the top 10 BRIC companies recommended as strong buys we can find Brazil’s Petrobras, Ambev, Embrear and Brasil foods, all recommended as good investment opportunities.
Agriculture
Because of its abundance of water, its spare farmland and its weather, Brazil is also a perfect place for agriculture and has been a net exporter of food for some time (unlike China and India who are importers). Recently, there has been a shift of US farmers moving to Brazil, to take advantage of the cheap farmland, water, cheap labor and excellent growing seasons. With the world’s growing population and growing demand for food, Brazil is a very smart agricultural investment. Agri-business infrastructure is highly advanced in Brazil and the government announced it will invest $54 billion into agriculture sector.
Alternative Energy
Brazil is one of the leaders in alternative energies and this trending market is a strong ground for investment. Environmental organizations declared Brazil as having the highest growth potential in South America for the next few years in the alternative energy field. Energy issues are promoted by the government which allows the proper financial resources for development and is consumed by the people. The Brazilian government invests billions in clean energy and as a result, is not dependent solely on electricity and its costs. It generates enough power for 1.5 million homes and is currently building more wind farms. The government is supporting these programs and encourages domestic and international investments for additional 400 wind energy projects.
Brazil was also the first country in South America to produce an electric car although it is a leader in biofuels use. The government is trying to promote the issue of electric cars and since the ethanol and sugar cane prices have gone way up in the last year, there is defiantly room of growth in this field.
Internet Use & Social networks
Brazil is one of the most advanced countries when it comes to internet use and social networks. It is has the largest number of Orkut users and as a result is a key spot for Google. Almost 75% of all internet users in Brazil are also Orkut users which popularized both the internet and the use of Google as a search engine and as an email account. Google shifted its Orkut labs to Brazil due to its great influence there. Facebook recently opened an office in Sao Paulo that will serve as its headquarters in Latin America.
This situation creates many opportunities for investors that can use social networks as part of their marketing. Advertisers and investors can use the millions of young, affluent consumers who spend most of their time in front of their computer. In addition, they can better understand these consumer’s preferences and can use them to sell their product, advertise their business and recruit. All this makes Brazil an open market, with consumers who are technologically capable and hold English language skills.
Sources:
1) Market Watch: Brazil Becomes World's Biggest Emerging Market
2) Invest in Brazil: Brazil Announces 54 Billion Investment into Agriculture Sector
3) Forbes: Investing in Brazil: What You Need to Know
4) Asia Investor Place: Top Emerging Markets: Brazil
5) Building.co.uk: International Markets: 10 fastest Growing Markets
9) Forbes: Brazil Oil, China Tech Top Value Picks
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