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Brazilian Economy Slows but Outlook Is Still Seen As Being Positive

Brazil has seen some enormous changes over the last decade as it has enjoyed rapid economic growth under a stable and productive government. Growth last year was 7.5%. The population is becoming wealthier with some 2 million low income homes set to be built over the next few years. Its unemployment rate is currently just 6% –something that many countries would envy.

However inflation is currently running at 7.3% and China, who are one of Brazil’s biggest trading partners are facing an economic slowdown. This is making some investors wary.

In spite of this the general outlook is still seen as being positive; President Lula did much to correct many of the imbalances that previously existed and the current president, Dilma Vana Rousseff has largely continued these reforms.

A considerable part of Brazil’s growth has been built on consumer spending, especially building and with the Pope due to visit in 2013, the World Cup in 2014 and the Olympics in 2016 this building looks set to continue.

The population in Brazil is young and growing rapidly and enjoying good income growth. Brazilians will be ready to buy homes for a long time in the future and many builders have already increased production. Despite this, there is little risk of overbuilding, especially in the lower end of the market.

Another major factor facing the country is the huge demand for energy and Brazil is going to have to build a lot of power plants to generate electricity, either using natural gas or coal.

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