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Investment in Brazil to rise as it grows to be 5th-largest economy?

Date added: 18th June, 2010 at 14:59
(view all articles from June, 2010)

Categories: Economy

Investment in Brazil could increase on predictions that its economy will expand to become the fifth-largest in the world.

Following a recent report in Fund Strategy that the burgeoning wealth of the country was attracting foreign speculation, the Buenos Aires Herald has said that the nation is growing to be a major world player.

Former president Fernando Henrique Cardoso's privatisation of firms such as Telebras from the mid-90s to 2002 led the way for current leader Luiz Inacio da Silva to develop Brazil's financial health, the newspaper suggested.

"We are on our way to being the world's fifth-largest economy," the nation's tourism minister Luiz Baretto Filho said in Johannesburg on Wednesday, adding that around 500 million tourists are expected to arrive in Brazil when it hosts the World Cup in 2014, according to the news provider.

Mr Barretto Filho went on to state that it is hoped that the country's gross domestic product (GDP) will have grown by between four per cent and 4.5 per cent by then.

Goldman Sachs recently released a report on the BRICs - an informal bloc of emerging markets which includes Brazil, Russia, India and China - stating that in the last ten years, the countries have contributed more than a third of global GDP growth, together expanding to nearly a quarter of the world economy. The investment bank went on to project that this improvement would continue.

In an interview with the Buenos Aires Herald, the Sao Paulo-based global investment research department at the financial institution commented that the rise of middle class salaries is the main driver of Brazil's success.

Indeed, the Instituto Brasileiro de Geografia e Estatistica recently revealed that the average monthly income in the country had risen 2.3 per cent to R$1,424.10 (£537.85) from R$1,423.32 between March and April of this year, while unemployment rates declined to 7.3 per cent - the lowest recorded level.

Meanwhile, the Goldman Sachs report looked optimistically on the outlook for continued growth in the middle-class demographic, noting that the number of people that earned over US$6,000 (£4,034) and under US$30,000 had surged by hundreds of millions. The firm predicted that this figure would make further gains over the next decade.

"Brazil's public accounts are in order," the research department told the newspaper. "Consumer and business confidence is at a record high and [the country] is now a creditor rather than a debtor."

The stabilisation of Brazil's economy following the global financial crisis proved its durability and strength, the bank added, expressing that the sentiment in the nation was one of "if we can get through this, then we can get through anything". ADNFCR-1477-ID-19846263-ADNFCR