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Brazil: Full Speed Ahead

Brazil is set for another strong year despite the U.S. slowdown and growing global credit crunch, experts say.


Last week, Brazils and Latin Americas aviation industry was abuzz with the news that David Neeleman, the founder and chairman of U.S. lowcost carrier JetBlue, would launch a similar airline in Brazil.

Neelemans venture is only the latest showing continued faith in Brazil despite the growing credit crunch and a U.S. economic slowdown. Foreign automakers plan to invest $4.9 billion in the South American country this year to expand capacity, the industry group Anfavea announced last week. Thats more than double the $2.1 billion invested last year. Meanwhile, US-based Coca-Cola, the worlds largest soft-drink company, plans to invest 1.5 billion reais (US$861 million) in Brazil this year.  That follows an investment of 1.3 billion reais last year.

The growing investments, along with a continued consumer boom, will help drive economic growth.  Brazils economy - Latin Americas largest - is expected to grow between 5.0 percent and 5.5 percent this year, Brazilian Finance Minister Guido Mantega reiterated last week. That follows GDP growth of 5.4 percent last year, the central bank announced last month. That was the best result in three years and above the Latin American average of 5.0 percent. Meanwhile, foreign direct investment reached a whopping $34.6 billion last year, nearly double the $18.8 billion registered in 2006, according to Brazils central bank.

Real estate is among the sectors that have been driving strong economic growth and it will likely continue to do so again this year, according to Thomas OConnor, co-head the new Latin America Real Estate Group of U.S.-based law firm Cooley Godward Kronish. "Brazil is extremely strong," he says. "Theres a middle-class boom."

While the U.S. sub prime crisis could slow down some real estate...

Keywords: Auto sector, Brazilian American Chamber of Commerce in New York, BRIC, Davis Polk & Wardwell, Investment Grade, LaCrosse Global Fund Services, Moodys


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