Country Profile: Brazil's Improving Economic Picture

Robert Hsu, December 15, 2009

In this Issue:

Stepping onto the Global Stage
Brazil's Positive Economic Outlook
A Pure Play on Brazil's Infrastructure Build Out

Brazil's Positive Economic Outlook

Given that Brazil's retail sector is expected to remain strong in 2010, I anticipate that the country will continue to post robust economic growth going forward. That's because Brazil has more than just domestic consumption in its favor…

Strong Demand from China: As I've mentioned before, China's recovery and continuing economic strength is spilling over to other countries around the globe. And Brazil is one of the top beneficiaries, as it's one of the world's leading exporters of natural resources. The country is currently supplying China with commodities such as iron ore and soybeans to help satiate the Asian country's robust demand.
Employment: Brazil's job market is improving, as the country's economy recovers from the global economic crisis. In October, Brazil's jobless rate fell to 7.5%, down from 7.7% in September.
Tax Cuts & Low Interest Rates: In order to spur economic growth in 2009, Brazil's policymakers slashed taxes on consumer products and cut interest rates to 8.75% -- a record low. Looking forward, the country plans to keep tax cuts on purchases of capital goods and computer sales, as well as flood the state development bank with 80 billion reais. The Brazilian government wants to ensure 5% GDP growth in 2010.

As you can see, the economic picture is looking brighter and brighter for Brazil going forward. And that means there will be profitable investment opportunities in the New Year as well.

Already, Brazil's economic strength has supported the country's benchmark stock exchange, Bovespa, in 2009. The index has surged 85% year to date. And I'm expecting much of the same in 2010, which will translate into great investment opportunities for us going forward.

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