Booming Brazilian Market

It may not be too long before the old joke about Brazil being the country of the future (and always will be) will no longer be relevant. The country's economy has experienced sustained growth and has reached some important milestones.

While import barriers are notoriously high in Brazil, the country has now begun to run a trade deficit. Exports have not fallen, but imports, especially of industrial products, are up significantly. Businesses are willing and able to purchase imported equipment, components, and supplies in order to enhance the quality of their own products and their competitive advantage. The currency has remained high enough to favor consumers and those seeking imports of everything from commodities to machines and retail goods but at the same time the Brazilian real has not gotten so expensive that exports have been crippled. The six percent growth in Brazilian industrial production in 2007 over the previous year was attributed to increased domestic demand for consumer goods, especially durable ones like vehicles and household appliances.

Long one of the world's largest debtor nations, Brazil has now become a foreign creditor. Brazil's Central Bank reported that the country's international reserves, swollen by record exports of agricultural commodities and oil and investment inflows, exceeded gross foreign liabilities for the first time in January. The strengthening of the economy has been steady. For the most part the inflation threat has remained under control and foreign direct investment has been on the rise.

To highlight the growing importance of the Brazilian market, the Federation of Commerce of the State of São Paulo (Fecomércio- SP) released a report in January showing that if the city of São Paulo were a country, it would be among the 50 largest economies in the world; in 47th place, ahead of countries like Egypt or Kuwait and equal to New Zealand. The GDP of the city of São Paulo is ahead of that of 22 U.S. states. The city has 11 million inhabitants.

-- Stanley Pfrang