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Monday, July 02, 2007
Special Reports

Brazil Business: Solid Five-Year Outlook

Brazil's business outlook the next five years is strong, business leaders say. And Lula will likely be followed by a more market-friendly president, experts predict.
BOOMTIMES: Sales of cars like the Chevrolet Vectra (top) are growing at strong levels, forming part of an overall consumer boom. President Luis Inacio Lula da Silva (above) gets part of the credit. (Photos: GM and Ricardo Stuckert/Brazilian Presidential Palace)

BY JOACHIM BAMRUD

Brazil is hot, sizzling hot. As the South American country awaits investment grade from the ratings agencies, foreign business executives and leaders are expressing strong optimism about the country's future the next five years. The optimism is in large part based on impressive growth in the economy, Latin America's largest.

"Consumer buying power in Brazil is increasing,” says Rui da Costa, managing director for Latin America and the Caribbean for Hewlett-Packard, the world's largest PC producer. “Our sales in the notebook market are booming, currently giving us the market share lead in this sector.  Forecast in IT spending by corporate companies also looks positive."

General Motors, the world's largest carmaker, is also reporting strong growth. "More consumers are buying their first new vehicle," says Isela Costantini, general director for product planning and market research for GM do Brasil. "There is a lot of credit and Brazilians are increasing their debts - with increasing credit lines."

GM forecasts 20 percent growth in Brazil this year. In April, sales of vehicles, motorcycles and parts grew 33 percent from the same month in 2006, according to official statistics agency IBGE.

"Clearly the liberalization of the telecom markets has been advantageous to us as a business, but it has also created a springboard for Brazilian companies, multilatinas and multinationals to put into action their "go global" strategies, a trend that will only continue to expand greatly in the next five years and beyond," says Hector Alonso, managing director for Global Crossing Latin America.

Also German companies, including software giant SAP, are reporting strong results in Brazil (See SAP: Booming Latin Business). "Because of Asia's unquenchable hunger for mining and agricultural products, Brazil will enjoy a lasting growth phase," predicts Peter Rösler, deputy general manager of Ibero-Amerika Verein (the Ibero-American Association), a Hamburg-based organization that includes major German companies doing business in Latin America.

However, the strong growth has also made Brazilian policy makers...

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