brazil

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Overview of the opportunity  

Read what Barrons had to say on Nov 7th, 2011

Barrons: Brazil Special Report "A Sunny Long-Term Outlook" Nov 7, 2011
“Brazil’s…long-term outlook is sunny, with a growing middle class, healthy banking system, stable government, abundant natural resources and globally focused companies.” Furthermore, “Brazil…offers the best opportunity…(because of its) quality management, pro-business outlook…natural resources and positive demographics are the best of the emerging markets.”

 

The Federal Republic of Brazil is Latin America’s biggest economy and is the fifth largest country in the world in terms of land mass and population with about 193 million people. It is the 7th largest economy in the world. Bolstered by strong domestic demand and a growing middle class, Brazil weathered the economic downturn better than most major economies and grew 7.5% last year, compared to an estimated 2.3% growth in the G7 countries and 2.8% in the United States. During the past decade, the country maintained sound macroeconomic policies to control inflation without sacrificing economic growth. This kept the inflation rate at 5.9% in 2010, and unemployment at 7.1%. Interest rates, though high compared to the rest of the world, remained historically low at the Central Bank rate of 10.75%. In 2010, the U.S. was Brazil’s largest import supplier followed by China, Argentina, Germany, and South Korea. The year 2010 ended with the U.S. holding a positive trade balance with U.S. merchandise exports to Brazil at US$ 35 billion, and imports from Brazil at US$ 24 billion.

 

In 2010, Fitch gave Brazil an investment-grade rating which brought it in line with rankings from Standard & Poor’s and Moody’s Investors Service. In 2010, foreign reserves hit a record level at US$ 287.8 billion. Brazil’s currency, the real, rose 34% against the dollar during the year.

 

Background

Following more than three centuries under Portuguese rule, Brazil gained its independence in 1822, maintaining a monarchical system of government until the abolition of slavery in 1888 and the subsequent proclamation of a republic by the military in 1889. Brazilian coffee exporters politically dominated the country until populist leader Getulio VARGAS rose to power in 1930. By far the largest and most populous country in South America, Brazil underwent more than half a century of populist and military government until 1985, when the military regime peacefully ceded power to civilian rulers. Brazil continues to pursue industrial and agricultural growth and development of its interior. Exploiting vast natural resources and a large labor pool, it is today South America’s leading economic power and a regional leader, one of the first in the area to begin an economic recovery. Highly unequal income distribution and crime remain pressing problems. In January 2010, Brazil assumed a nonpermanent seat on the UN Security Council for the 2010-11 term.

 

Demographics

Profile for 2011

Population

203,429,773 (July 2011 est.)

note: Brazil conducted a census in August 2000, which reported a population of 169,872,855; that figure was about 3.8% lower than projections by the US Census Bureau, and is close to the implied under-renumeration of 4.6% for the 1991 census

 

Age structure

0-14 years: 26.2% (male 27,219,651/female 26,180,040)

15-64 years: 67% (male 67,524,642/female 68,809,357)

65 years and over: 6.7% (male 5,796,433/female 7,899,650) (2011 est.)

 

Median age

total: 29.3 years

male: 28.5 years

female: 30.1 years (2011 est.)

 

Population growth rate

1.134% (2011 est.)

 

Birth rate

17.79 births/1,000 population (2011 est.)

 

Death rate

6.36 deaths/1,000 population (July 2011 est.)

 

Net migration rate

-0.09 migrant(s)/1,000 population (2011 est.)

 

Urbanization

urban population: 87% of total population (2010)

rate of urbanization: 1.1% annual rate of change (2010-15 est.)

 

Sex ratio

at birth: 1.05 male(s)/female

under 15 years: 1.04 male(s)/female

15-64 years: 0.98 male(s)/female

65 years and over: 0.73 male(s)/female

total population: 0.98 male(s)/female (2011 est.)

 

Infant mortality rate

total: 21.17 deaths/1,000 live births

male: 24.63 deaths/1,000 live births

female: 17.53 deaths/1,000 live births (2011 est.)

 

Life expectancy at birth

total population: 72.53 years

male: 68.97 years

female: 76.27 years (2011 est.)

 

Total fertility rate

2.18 children born/woman (2011 est.)

 

Nationality

noun: Brazilian(s)

adjective: Brazilian

 

Ethnic groups

white 53.7%, mulatto (mixed white and black) 38.5%, black 6.2%, other (includes Japanese, Arab, Amerindian) 0.9%, unspecified 0.7% (2000 census)

 

Religions

Roman Catholic (nominal) 73.6%, Protestant 15.4%, Spiritualist 1.3%, Bantu/voodoo 0.3%, other 1.8%, unspecified 0.2%, none 7.4% (2000 census)

 

Languages

Portuguese (official and most widely spoken language)

note: less common languages include Spanish (border areas and schools), German, Italian, Japanese, English, and a large number of minor Amerindian languages

 

Literacy

definition: age 15 and over can read and write

total population: 88.6%

male: 88.4%

female: 88.8% (2004 est.)

 

School life expectancy (primary to tertiary education)

total: 14 years

male: 14 years

female: 14 years (2008)

 

Education expenditures

5.08% of GDP (2007)

 

Maternal mortality rate

58 deaths/100,000 live births (2008)

 

Children under the age of 5 years underweight

2.2% (2007)

 

Health expenditures

9% of GDP (2009)

 

Physicians density

1.72 physicians/1,000 population (2007)

 

Hospital bed density

2.4 beds/1,000 population (2009)

 

Obesity – adult prevalence rate

11.1% (2003)

 

Political Risk

 

Economic Overview

Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil’s economy outweighs that of all other South American countries, and Brazil is expanding its presence in world markets. Since 2003, Brazil has steadily improved its macroeconomic stability, building up foreign reserves, and reducing its debt profile by shifting its debt burden toward real denominated and domestically held instruments. In 2008, Brazil became a net external creditor and two ratings agencies awarded investment grade status to its debt. After record growth in 2007 and 2008, the onset of the global financial crisis hit Brazil in September 2008. Brazil experienced two quarters of recession, as global demand for Brazil’s commodity-based exports dwindled and external credit dried up. However, Brazil was one of the first emerging markets to begin a recovery. Consumer and investor confidence revived and GDP growth returned to positive in 2010, boosted by an export recovery. Brazil’s strong growth and high interest rates make it an attractive destination for foreign investors. Large capital inflows over the past year have contributed to the rapid appreciation of its currency and led the government to raise taxes on some foreign investments. President Dilma Rousseff has pledged to retain the previous administration’s commitment to inflation targeting by the Central Bank, a floating exchange rate, and fiscal restraint.

Source: CIA World Factbook

 

Other advantages/disadvantages

 

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