Brazil - Red Hot

Reports don't come more bullish than this - according to Morgan Stanley, Brazil is "red-hot" and its economy is "firing on all cylinders". Almost all aspects of Brazil are booming, proving that there has never been a better time to invest in Brazil.

In the ‘Global Economic Forum' published last week, Morgan Stanley looks at the long list of extremely encouraging figures coming out of Brazil. From these figures, the global investment bank concludes that its previous prediction for GDP growth this year needs to be revised from an already-high 5.8% to an even-higher 6.8%.

For Morgan Stanley, the economy in Brazil "is firing on all cylinders. Recent activity data has been strong and even better than expected". Industrial production and retail sales - up 18.4% and 12.3 respectively % in the year to February - are two of the top figures. Morgan Stanley also finds that demand drivers such as the market for credit, employment and consumer confidence are also high.

At a time when many developed economies are struggling with job losses, employment is particularly good news in Brazil. Unemployment is currently running at 7.3% in Brazil, the lowest rate since 2001. What is more, year-on-year job creation in Q1 this year reached a record 2.7 million jobs. As Brazil's economy continues to boom, job creation will almost certainly stay on an upward trend.

Reflecting the very positive job situation, wages are also rising. The highest increase was seen in construction in Brazil where salaries rose by almost 10% in the year to April. Brazil is in the midst of a massive boom in its construction industry - not only is Brazil putting infrastructure into place for the 2014 World Cup and 2016 Olympics, the property market in Brazil is also under huge expansion. Much of this is coming from the government-backed social housing programme, Minha Casa Minha Vida. The programme's building of 3 million homes is expected to change the face of property investment in Brazil over the next four years.

Basing its predictions on the economic figures, Morgan Stanley reaches the conclusion that GDP growth in Brazil for this year may well reach 6.8%. Arguing that the 2% growth in Q4 2009 and the "strong growth momentum so far this year" both point to an encouraging growth figure for Q1 this year, Morgan Stanley believe Brazil's economy may "grow this year at the strongest annual pace seen in more than 20 years".

While Brazil's economy is not without its problems - inflation is rising meaning that the Central Bank of Brazil will need to take monetary tightening measures, all the signs are that Brazil is on track for an excellent year.

For Obelisk, this confirms excellent potential for investment in Brazil. Opportunities are available in the real estate sector and related industries, and returns are high. Like Morgan Stanley on the economy in Brazil, we believe that the potential for investment in Brazil is also "red-hot".

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