Brazil Property Investment - Even More Bullish

Published ¤ 16/10/2009

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The latest title of "Global Economic Weekly" for Latin America says it all - "Brazil: turning even more bullish". This affirmation from a world leader in investment management is the perfect complement to Brazil's successful Olympic bid and yet another boost to Brazil property investment potential.

The latest issue of "Global Economic Weekly" published on 2nd October by Bank of America Merrill Lynch (BofAML) is certainly bullish. In it, BofAML has bumped its forecast for Brazil's GDP growth next year up to 5.3% from 4.5%. This 0.8% hike comes on the back of Brazil's strong GDP growth in Q2 (1.9% - well ahead of the meagre 0.3% in Germany and France), continual monthly increases in consumer spending and rising industrial output (2.1% increase in Q2).
The BofAML three-page report is full of glowing statistics from the Brazilian economy and it paints an equally glowing outlook. According to BofAML, "a brighter outlook for the global economy and a faster recovery of labor conditions have prompted us to revise our 2010 growth forecast to 5.3% from 4.5%". The report highlights Brazil's economic rebound in industrial production, retail sales, formal job creation and credit growth. BofAML predicts 2.2% GDP growth for Q3 this year with 1.8% growth for the final quarter.
But the aspect of the Brazilian economy that most impresses BofAML is "the sharp recovery of labor conditions". Seasonally adjusted unemployment in Brazil is now 7.9%, the same level as November last year and job creation in August was 176,000, similar to the pre-recession rate. According to BofAML, the current level of employment and job creation means consumers in Brazil are "at a very solid stance".
The report goes on to say that it expects inflation to remain contained and drop below 4% by the second quarter next year and that the Central Bank of Brazil is likely to maintain interest rates at their current level of 8.75%. BofAML concludes that there is "no evident overheating of domestic demand".
On the financial front, Brazil also has plenty to be proud of. Moody's recently awarded Brazil investment rating, making Brazil only the second Latin American country to achieve this. And earlier this year, Brazil's huge foreign reserves meant it became a net creditor to the International Monetary Fund, a role usually reserved only for the world's richest countries.
In terms of top sporting events, things could hardly be more bullish for Brazil. Probably the world's footballing nation per se, Brazil is set to host the 2014 World Cup. Just two years later, Brazil will also host the 2016 Olympics. These world-class events guarantee Brazil a prime spot in the international limelight for years and will make a significant contribution towards the travel and tourism industry.
The BofAML report presents a series of key economic forecasts for Brazil including GDP growth, industrial output and consumer spending (private consumption). The list of figures makes bullish reading. BofAML predicts 5.3% growth for Brazil in 2010 with 4.5% in 2011. Industrial output in Brazil is expected to rise by 10.7% next year with consumer spending growing by almost 5%.
This bullish optimism - based on rock-hard facts - about Brazil adds further weight to Brazil as a property investment destination. The list of reasons why Brazilian real estate is currently one of the best buys anywhere is getting longer and longer. Or as BofAML would have it, property investment in Brazil is turning even more bullish.
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