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Brazil Best for BRICs Investment

12-01-2010 09:22 AM CET | Industry, Real Estate & Construction

Press release from: Obelisk

Credit rating is a vital factor in investment considerations. And when it comes to a country with a stable credit rating for investment, Brazil is reportedly the best bet among the four BRIC nations and other emerging markets.
In a recent report, Standard & Poor’s finds that the stable democracy and political climate in Brazil are hugely advantageous. So advantageous that they mark the difference between Brazil and the other BRIC countries (Russia, India and China). For Standard & Poor’s, Brazil’s “well-developed and stable democratic system remains the most critical factor supporting the rating and differentiating Brazil from the other BRIC countries”.
On comparison, the BRIC nations all look fairly similar. The four countries are huge in size and population – over 2 million square kilometres and home to over 100 million people – and all four have a GDP of over US$600 billion. Among the rest of the world’s nations, only the US can also boast these characteristics.
But, according to Standard & Poor’s, the similarities stop here. China and India share rapidly growing economies and the need for massive imports of commodities because of their limited natural resources. On the other hand, Brazil and Russia have wealthy economies, abundant natural resources and slower economic growth.
These elements mean that Brazil is able to maintain GDP per capita levels that are considerably higher than those in China and India. A look at graphics for GDP growth for capita clearly illustrates this. While India’s per capita growth will barely top 1% this year when China will scrape 4%, Brazil’s is forecast to grow at over 10%. For 2011 and 2012, India is expected to see less than 2% growth, China around 5% and Brazil an average of around 11%.
This impressive growth in per capita wealth translates into important potential for investment in Brazil. As the economy expands, millions of Brazilians are benefitting from the booming economy and joining the rapidly-growing middle classes. Increased purchasing power has led to buoyant consumer spending, which registers impressive rises quarter after quarter. Unsurprisingly, Standard & Poor’s points out that “Brazil’s economic growth strategy remains anchored on the development of its domestic market”. It’s clear that the main engine driving economic growth in Brazil are the middle classes and their newly-acquired purchasing power.
Standard & Poor’s find that in some aspects, Brazil does not score as highly as the other BRICs. Brazil’s government debt is high (India’s is higher) and taxes are high on some areas of doing business in Brazil. But the credit agency praises Brazil’s low fiscal deficit, which is consistently maintained at around 2% to 3% of Brazil’s GDP. For Standard & Poor’s, this low deficit is “key to our upgrades of the sovereign over the past several years”. Another very positive factor is the “increasing reliance by Brazil on foreign direct investment”.
However, for Standard & Poor’s and for anyone looking at investment in Brazil, the over-riding difference between Brazil and the other BRICs is political. Of the quartet, Brazil is the only country with a strong and stable political system, which is ultimately its biggest advantage.
This is one of Obelisk’s vital criteria for investment in Brazil. We believe that, while all the BRICs present interesting investment potential, only Brazil has a stable democracy that can provide a solid background for business and investment. For Obelisk, the only BRIC offering peace of mind in this respect for investment is Brazil.

About Obelisk: Obelisk offers select investment opportunities in Brazil and gives investors security, profitability and diversity thanks to a combination of close attention to our clients' investment requirements and high quality in-house research and analysis.

For more information on investment in Brazil and to find out about Obelisk’s latest projects there, contact us on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: www.obeliskinternational.com.

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