Latest News

23-Feb-2010

Confidence in real estate as an investment vehicle is high this year, particularly from institutional investors.

Better than Expected for Brazil

10 June 2009

Brazil's latest economic figures show, according to the Financial Times, that "Brazil is recovering more quickly than expected from the global economic crisis". A myriad of positive statistics prove that Brazil, the world's 10th largest economy, is still by far one of the best places for investment (including property) in the world.

Brazil's stock exchange, the Bovespa (the largest in Latin America), has risen by a massive 40% since 1st March and on the back of the latest economic news, Brazilian bond yields reached their highest for nearly two months. Investor interest in Brazil is still undoubtedly high.

Brazil has just released figures for the country's Q1 GDP growth for this year and these have caught many analysts by surprise. The size of the global slowdown had led numerous experts to predict that Brazil's economy would contract hugely during the first quarter of this year. However, although the economy did experience a downturn, the actual figures are much better than expected. Year-on-year Q1 GDP growth decreased by 1.8% while quarter-on-quarter growth fell by 0.8%. Analysts had forecasted year-on-year decreases in the region of 3% and a quarterly fall of almost 2%.

Brazil releases its quarterly growth figures relatively late and Q1 statistics (revealed yesterday) come at a time when Brazil's economy is well into the second quarter of this year. February and March heralded a turnaround for the Brazilian economy and since then, there has been a lot of positive data. As well as spectacular rises on the stock exchange, industrial output has risen for four months in a row and retail sales have increased for three consecutive months. For this reason, Brazil's Finance Minister, Guido Mantega, says that focusing on Q1 growth figures are like "looking through a rearview mirror because the economy is already showing signs of recovery."

This view is shared by Alexandre Lintz, Chief Economist at BNP Paribas in Sao Paulo, who claims that the fall in GDP growth in Brazil "wasn't as steep as expected given the size of the global crisis." Lintz expects this year's second and third quarters to show sequential growth of 1% each.

This positive growth is likely to be stimulated by a further fall in interest rates, currently under consideration by the Brazilian Central Bank. Lower rates will encourage credit and consumer spending, leading to major reactivation of the economy.

Based on recent economic performance, the Brazilian government believes the economy will grow by 1% this year and by 4% increase next year. These figures are considerably above those predicted for the vast majority of countries in the world - for 2010, the IMF forecasts zero growth for the world's 33 advanced economies. This further confirms Brazil's place as one of the best investment locations in the world today.

« Back