24/12/2011

Brazil overtakes UK

as sixth-largest economy

UK relegated to seventh place in world league of leading economies in 2011, according to team of economists

Brazil has overtaken the UK to become the world’s sixth-largest economy, according to a team of economists. The banking crash of 2008 and the subsequent recession has relegated the UK to seventh place in 2011, behind South America’s largest economy.

The only compensation for ministers concerned by Britain’s relative fall is that France will fall at a faster pace. Nicolas Sarkozy can still boast that France is the fifth-largest economy behind the US at number one, China, Japan and Germany, but by 2020, the Centre for Economics and business Research (CEBR) forecasts it will fall past the UK into ninth spot. Germany will also slip to seventh place in 2020.

CEBR chief executive Douglas McWilliams said: “Brazil has beaten the European countries at soccer for a long time, but beating them at economics is a new phenomenon. Our world economic league table shows how the economic map is changing, with Asian countries and commodity-producing economies climbing up the league while we in Europe fall back.”

Europe is expected to suffer a “lost decade” of low growth following a credit binge over the past 20 years. Paying back debts over a short timescale will restrict growth and prevent many countries, including the UK, from clawing back output lost in the banking crash for many years.

The European Union, recently described by one Chinese official as “a worn-out welfare society”, will remain the world’s largest collective trading bloc, though a recession next year is expected to hit global growth. The latest forecasts by the CEBR show world growth falling to 2.5% in 2012, a downward revision from the forecast made in September.

However, the CEBR warned a scenario involving “one or more countries leaving the euro, sovereign defaults and banks going bust and needing to be bailed out” would reduce global growth in 2012 to 1.1%. The European growth slowdown is forecast to be even more marked, with a fall in GDP by 0.6% and a possible fall of 2% if the euro currency club breaks up. The US forecast is better, with growth of 1.8%.Emerging economies, which have seen their stock markets dive in recent months as investors assess the fallout from the euro crisis, would regain their momentum, said the CEBR.

01/12/2011

Brazil - steady growth for

America’s only BRIC

Over the past 10 years, Brazil has been through deep transformations.

By Rubens Barbosa former Brazilian ambassador to the US and UK

Their origins can be traced to the country’s modernization in the 1990s, as a result of a successful privatisation program, of the stabilisation of the economy and the strengthening of the banking system.

Regarding the economy, the administration by Luiz Inacio Lula da Silva (who used to oppose his predecessor, Fernando Henrique Cardoso) kept the main economic policies in place: fiscal austerity, inflation targets and a fluctuating exchange rate.

As a result, the risks of investing in Brazil decreased significantly, economic growth rates went up, inflation rates retreated to levels similar to other countries around the world, and Foreign Direct Investment flows are only second to those of China.

The country’s international reserves now exceed $350bn, which serve as a cushion to protect the country’s economy against economic crisis abroad, such as in 2008 and now.

Foreign trade has multiplied by a factor of four, reaching half a trillion dollar in 2011, with China becoming Brazil’s main economic partner, ahead of the United States.

The internationalisation of the Brazilian economy has accelerated, and the country’s multinationals (banks and companies involved in construction, meat production, airplanes, steel, transport and textiles) have gained prominence overseas.

Coupled with wage growth above inflation and overall economic growth, up to 40 million Brazilians have joined the middle class. With that, the middle class accounts now for 50% of Brazil’s 190 million people.

The domestic market has expanded substantially, with an increase of lending to consumers.

With the strong backing of a stable and steadily growing economy, and gaining confidence from the global community, Brazil has taken on a bigger role on the international stage. Its foreign representations have been growing significantly, with the opening of over 40 embassies, mostly in Africa, Asia, Central America and the Caribbean.

Active foreign player

Brazil’s inclusion alongside China, India and Russia projected the country to a position that in normal conditions it would have taken years to achieve

Brazil is one of the main actors in international agencies for global issues, such as environment, climate change, energy (fossil and renewable), foreign trade, water and human rights. A natural candidate for a permanent seat at the UN Security Council (once its reform is decided), Brazil is a member of the G20 group, a new decisive forum for economic issues.

Brazil is the country that has probably benefited the most since the BRICs acronym came to life. Its inclusion alongside China, India and Russia projected the country to a position that in normal conditions it would have taken years to achieve.

As proposed by Brazil, the BRIC group was formalized itself and started to meet regularly, creating a relevant international factor through the political and economic weight of the four countries, now joined by South Africa.

The growing foreign presence is projecting Brazil beyond its borders in South America; the country is very active on the African continent and in the Middle East, mostly because of the its “soft power”.

23/08/2011

News: Brazil

Airport contract awarded

The Inframérica consortium has won the contract to build and operate Brazil’s São Gonçalo do Amarante international airport. The consortium won the airport concession at an auction on Monday, after entering a bid of $106 million (170 million reais), according to Brazil’s civil aviation agency, Agência Nacional de Aviação Civil (Anac).

Terms of the contract state that the group has three years to build the airport and will then operate it for the next 25 years.

The Inframérica consortium is made up of Brazil’s Grupo Engevix and Argentina’s Corporación America. Engevix includes the construction arm Engevix Engenharia and three other companies. Anac added that the group plans to invest around $404 million in the airport throughout the contract period.

Despite the withdrawal of Grupo Aeroportuario del Pacífico (GAP) from the bidding process last week, the auction still attracted four bidders in total. The unsuccessful groups included ATP-Contratec, Aeroportos Brasil and Aeroleste Potiguar. According to Engevix president José Antunes Sobrinho, Inframérica plans to have the airport ready in time for the 2014 Football World Cup.

Speaking to local newspaper Valor Econômico, Sobrinho said: “Commercially, it’s in our interest that the airport is ready in time for the Cup, so we can take advantage of peak demand at the terminal.”

The 28-year concession contract entails finishing construction of the airport –including completing the runways, take-off and taxiing lanes – and will also include building new terminals and operating and maintaining the airport.

On completion, it will be the largest airport terminal in Latin America and the seventh largest in the world estimated to handle around 3mppa in its first few years of operation, with traffic increasing to 11 million passengers by the end of the concession period. It will also be the first gateway in Brazil to be privatized.

19/03/2011

News: Brazil

From Strength to Strength

Brazil is one of fastest growing major economies in the world and has quickly moved from being ranked the tenth largest by GDP in the world to seventh by purchasing power and eighth by nominal GDP. The economy has grown in 2010 by some 7.5% with a GDP of 3.675 trillion Reais.  It is clearly the number one investment player amongst the Latin American nations and taking Brazil’s purchasing power into consideration it has now overtaken Britain and France and is set to break into one of the world’s big five countries.

Source: The Economist - March 2011

18/11/2010

News: Brazil

Ritz Launches New Office In Natal

As part of a series of expansion plans; Ritz Property Investimentos Imobiliários LTDA, the Brazilian arm of UK parent company DLT International, has launched its newly refurbished 5000 sq ft offices amongst some of the most recognised real estate agents in the Natal region.

Ritz New Office

Following the 3 month refurbishment, the offices now provide an exceptional working environment which incorporate the latest IT facilities, prestigious meeting rooms and its own dedicated sales team to service the local region plus visiting clients from around the world.

The reception at Ritz newly refurbished offices

Ritz is demonstrating its ability to become one of the top property developers in the region and continues to invest into local employment. It is clear that these are exciting times for Ritz and its employees which now consists of some of best architects, engineers, sales, construction and admin staff in the state of Rio Grande do Norte.

10/05/2010

News: Brazil

Brazil prices to rise as UK sales

hit £30m

UK investors looking for cheap deals sent more than £30 million to Brazil for property sales last year – and agents are scrambling to cash in.

But some argue rising prices and a strengthening currency could see the country competing with destinations closer to home.

Around £30.1 million was exchanged into Brazilian reals by UK buyers in 2009, up from £4 million in 2004, according to Central Bank of Brazil figures obtained by Moneycorp.

The currency broker launched a dedicated Brazilian exchange service in October 2009 and has seen a 40% annual rise in enquiries about property in Brazil so far this year.

“A lot of our clients one or two years ago were big investors but now we’re seeing more £20,000 land deals with people for whom that is a large part of their savings,” said the firm’s Brazilian account manager, Dean Roe.

“Last year it was better to have liquid funds – now the economy has started to recover people have more confidence to invest.”

Market shift
Agents have jumped on the shift towards cheap development land plots fuelled by promises of rapid price growth, with many focusing on the less-developed northeast of the country. And some, such as Experience International, claim enquiries and sales are up slightly.

But the window for cheap investment may not last long thanks to the country’s housing shortage, growing middle class demand for holiday homes and the attention brought by the upcoming Brazilian World Cup and Olympics.

“We could find if the exchange rate keeps going up and prices rise enough that there comes an equilibrium where Brazil is as expensive as closer destinations such as Bulgaria and Turkey,” said Clive Hawkes of Bond International – which has sold Brazilian property for seven years.

New-build prices rose by 25% year-on-year in the third quarter of last year, according to Global Property Guide.

The exchange rate has also seen a big shift, said Roe. “The pound was worth around BRL4 just a year ago, but as sterling has weakened it’s now closer to BRL2.7.”

Strong competition
However, the reasons behind the price rises will keep returns strong, said Hawkes. “Brazil’s very big market for internal tourism and growing local demand for property will help it compete as an investment destination.

“When we reach this equilibrium, Brazil will probably be so in people’s minds that it will still be a favourite because of its tourism potential.”

Northeast Brazil’s real estate and tourism investment conference, Nordeste Invest, takes place on 10-12 May in Natal.