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Thursday, June 12, 2014

Brazil continues expansion in build up to 2014 FIFA World Cup

Brazil FIFA 2014 World Cup
Large sporting events help boost local economic activity
By Bradley Shore

Brazil’s finance minister, Guido Mantega has revealed that the nation’s economy unexpectedly notched up a growth rate of 0.7 per cent in the last quarter of 2013, more than twice the rate that had previously been forecast. Mantega has told reporters that it has been “a surprise, even for the government” but nevertheless this clearly helps to provided a much-needed boost to Brazilian President Dilma Rousseff, as she attempts to restore some of her credibility with business leaders and protesters alike in order to win re-election this October.

However, even the unsurprising rate of growth that has occurred is nowhere near the dynamic 4-5 per cent annual levels enjoyed over the last 10 years, catalysed by Chinese demand for Brazilian commodities, which has helped make the country a star amongst new and emerging markets.

The effects of the global recession, high consumer debt, inadequate infrastructure and increasingly dwindling business confidence have brought South America’s biggest economy back to its senses with a bump in recent years. It is no surprise that the government were surprised by the statistics that signalled a break in the long string of poor economic data and marked the appearance of at the very least, a small semblance of growth.

Quite fortuitously, at the same time as the 0.7 per cent economic increase, a 6.3 per cent increase in investment in 2013 promises to propel the economy even further forwards. It will also be enough to give Rousseff a bit of leverage with business leaders ahead of the election to create a market-friendly investment environment and draw further revenues from the country’s budget.

In line with the country’s economic growth, Brazil is continuing to improve its infrastructure ahead of the FIFA World Cup that begins later this month. A report by STR Global Construction shows that out of the 390 hotels in the construction pipeline in  Central and South America, Brazil have the most rooms currently in construction with with nearly 13,000 reported as being in construction at the end of March.

Rupert Snowden of Innovo Property thinks that the economic growth is also going to boost the country’s housing market. “We can clearly see economic growth in a number of key sectors,” he said. “I see no reason why this growth shouldn’t expand into the real estate market as Brazil is becoming an increasingly attractive investment destination for investors from both emerging markets and some of the more traditional ‘powerhouse’ economies.”

Despite high consumer debt, consumer spending is still at relatively high levels, with an increase of 0.7 per cent in the final quarter of 2013 and government spending expanding by 0.8 per cent during the same period it would seem to appear that domestic markets are further helping to boost the economy. Farming and agriculture has also enjoyed a growth spurt thanks to record harvests of corn, sugar cane and soy in 2013. All in all, there appears to be an influx of positive and optimistic news emerging from Brazil and it will be very interesting to see what impact the World Cup will have on the nation’s economic standing during 2014.

About the author: Bradley Shore is an experienced travel and investment blogger, he likes to write about the different types of investment in the different countries of the world. His most reecent article was just for fun as the world cup is only round the corner.

Image license: US-PD