Brazil Powers up the Economic Power Ranking
On the back of 7.5% GDP growth last year and a strong currency, Brazil could now rank as the world's fifth largest economy. This economic power confirms the exceptional potential for Brazilian investments.
According to Goldman Sachs, Brazil's economic performance in 2010 with a GDP of US$2.2 trillion means Brazil now lies in fifth position in the world economic rating. Brazil's economic surge last year has pushed it from eighth place to fifth, overtaking traditional giants such as Italy, France and the UK in terms of economic size.
In the midst of the aftermath of world recession, Brazil's recovery and strong economic growth last year has surprised many analysts. For Goldman Sachs, Brazil "has delivered results much sooner than we had originally envisioned". Ex-President Lula must also be very pleasantly surprised - in 2009, he predicted Brazil would occupy fifth position sometime between 2015 and 2020.
Future for Brazilian Investment
For those with investment in Brazil, the news confirms the country's economic solidity and its potential as an investment destination. Along with China (the other BRIC nation in the global top five), Brazil is undoubtedly on track to become a world power to be reckoned with.
Goldman Sachs highlight that nominal GDP in Brazil is now "a remarkable three times bigger" than in 2003. The investment banking firm also points out that to continue healthy growth - the firm predicts 5% for Brazil this year - Brazil needs to drop interest rates and continue to reduce government spending to attract further investment. Foreign investment in Brazil reached record levels last year and is expected to achieve even higher figures this year.
Calculations by The Economist find Brazil now lies in seventh place, overtaking Italy in 2010. However, The Economist points out that with this year's predicted 4.5% to 5% growth (higher than the rate forecast for France and the UK), Brazil can expect to break into the big five at some point during this year.
Emerging Market Powers
For Goldman Sachs, the latest economic achievement from Brazil confirms the huge potential in emerging markets. The firm believes that the combined economies of the four BRIC nations (Brazil, Russia, India and China) are now positioned to overtake the US by 2018.
Along with Brazil, Goldman Sachs also looks at China, the largest of all emerging markets and currently the world's second economic power. However, the recent turmoil in North Africa and the Middle East means "there are lot of nervous eyes aimed towards China" as market observers worry about collateral effects. Unlike China, Brazil is an established democracy, an undeniable advantage when it comes to the security of investing in Brazil.
For Obelisk International, Brazil's new ranking as seventh largest economic power more than confirms the country's potential. Obelisk International's in-house research has monitored Brazil's recent economic progress and witnessed its strength, particularly last year. We believe that this strength is here to stay, providing a solid background to any Brazilian investment.
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