Why We Like Brazil
In 2012 Brazil is the joint sixth biggest (together with the UK) global economy, and by 2016 the IMF and World Economic Outlook forecast that Brazil will have left the UK behind, and will be the world’s fifth largest economy with a GDP of $3.1Tn/$3.1Trillion Brazil’s growth rate over the past decade has been staggering. In 2000 Brazilian GDP was a mere $0.6Tn, a third the output of the UK, and ranking the country globally at number ten.
The latest available data from the UNCTAD registers Brazil as the second most popular destination globally for Foreign Direct Investment (FDI) by value, and fifth by the number of FDI projects. It is interesting to note that the Northeast, where Liquid has had its Brazilian operations since 2006, is a highly active area for FDI; it has attracted 18% of the total into Brazil (93 projects), impressive when set against the 36% which flows into the Southeast, which includes São Paulo and Rio De Janeiro.
The govt. will be reactivating its privatization program with a high degree of confidence in 2013. 7,500km of roadway will be floated on the stock market. When completed, Brazil will have 22,000km of toll-roads, the most extensive network in the world. Further momentum from both domestic and foreign investors will come from other utility focused listings. Add to this the excitement and attention which Brazil will enjoy in the lead up to the two greatest global festivals going, the soccer World Cup in 2014, and the Olympics in 2016, and based on historic precedent (most relevantly the Beijing Olympics in 2008), it is almost certain that asset prices in the country will rise.
The inherent strength throughout the Brazilian economy set against the uncertainty and volatility elsewhere in key emerging markets (China and India) makes us very confident in the prospects for the country. Remember that Brazilian 2013 GDP estimates of ~4% makes it the BRIC with the most improved performance y-o-y.
