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Monday, January 28, 2008
Special Reports
COUNTRY REPORT

Bullish on Brazil

Brazil’s economy is booming and has a bright outlook. A special report on the key benefits and challenges of doing business in Brazil.
NEW OIL GIANT: Lula with workers at state oil giant Petrobras. (Photo: Brazilian President's Office)
BOOM TOWN: Sao Paulo, the business hub of Brazil and the third-largest city in the world. (Photo: State of Sao Paulo)
CONSUMER BOOM: Shoppers at Aricanduva in Sao Paulo, Latin America's largest mall. (Photo: Aricanduva)

BY JOACHIM BAMRUD

Foreign investors are bullish on Brazil. Despite challenges ranging from uncertainty over the U.S. economic slowdown's impact to a cumbersome tax system, leading executives at companies like Chevron, Microsoft, Cargill, VeriFone and Skanska all express strong optimism about the outlook for Brazil, Latin America's largest economy.

"All macro trends are positive," says Sergio Rial, president of the Brazil operations of Cargill, the second-largest privately-held corporation in the United States. "Domestic market growth should continue to fuel GDP in the coming years."

Hernan Rincon, who heads up the Latin America division for U.S.-based software giant Microsoft, agrees. "We're very optimistic about Brazil," he says.

Behind the optimism is a combination of factors, business leaders say.  First, Brazil has a growing market, with the economy growing more than 4.0 percent in the last four years, Rial says.

Brazil's economy managed to grow faster than expected last year. GDP increased by 5.7 percent in the third quarter, the fastest year-on-year expansion since June 2004 and higher than the median 4.9 percent prediction in a survey of 37 analysts, according to Bloomberg. The International Monetary Fund estimated that Brazil's GDP increased by 4.4 percent last year, but private sector economists predict a higher figure.

Second, the economy is diversified when compared to other Latin American economies, Rial points out. Agribusiness alone accounts for about 25 percent of the country's GDP. And the country can boast a good level of entrepreneurship, both in terms of quality and quantity, he says.

LARGER THAN INDIA

Then there's the size of the Brazilian market. In addition to having the largest economy and population in Latin America, Brazil can boast of having the world's ninth-largest economy (ahead of India), according to a Latin Business Chronicle analysis of IMF data for 2008.

With a population of 189 million, Brazil is the world's fifth-largest country in...

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Keywords: Brazilian banks, competitiveness, corruption, Dell, education, Fiat, General Motors, IPO's, oil, Petrobras, technology, trade, Volkswagen,

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