Brazil takes centre stage in South America

Despite news of the recent downturn in Brazil’s economy, multinational corporations are continuing to invest billions in Brazil. Not only is Brazil the largest economy in South America, it is also ranked as the 6th largest economy in the world (expected to rank 5th during the next decade). The 2014 FIFA World Cup and the 2016 Olympic Games will further raise the country’s international profile in the coming years.

Brazil has advanced manufacturing, mining and agriculture sectors and rapidly expanding technology and service industries. It is also the leading hub for innovation in South America and has the most sophisticated and diversified science and technology system in the region.After 16 years of economic stability and relatively little impact from the GFC, Brazil’s economic fundamentals remain strong and sustainable.

Foreign direct investment to Brazil has increased investor and market confidence in the South American giant. Last year, Brazil was the second largest global destination in attracting FDI at US$65.2 billion and fifth in terms of FDI projects. In 2011 alone, there were 507 FDI projects in Brazil which created over 160,000 jobs. The top region for FDI in Brazil is Sao Paulo, attracting 26% of all FDI projects. Rio de Janeiro is ranked second, attracting 8%.

What are Brazil’s key competitive advantages?:

  • Social and economic growth combined with economic and environmental stability
  • Large and strong domestic market due to a rapidly growing middle class. With a population of 191 million people, a well educated middle class and millions of working class citizens, Brazil’s importance as a consumer market is on an upward trajectory.
  •  Wealth of natural resources and clean and abundant renewable energy

Top sectors attracting foreign direct investment:

  • Service activities have driven 52% of the total FDI projects
  • The ICT sector generated 105 FDI projects in Brazil and ranked 4th  in terms of job creation in Brazil in 2011 (created 17,724 jobs)
  • Business services attracted 53 FDI projects in 2011
  • Financial services attracted 35 FDI projects in 2011

Information and Communication Technology (ICT) and New Media

Brazil is the largest ICT market in South America, after Mexico. It is also one of the largest IT markets within the emerging economies. IT end-user spending in Brazil is expected to grow to $134 billion in 2014. The largest share of spending will be on telecom equipment (representing 72% of the market, followed by IT services at 13.3% and computer hardware at 11.9%).

Clean Technology

In 2009, the Brazilian environmental technologies market was estimated to be worth US$9.0 billion. Given the projected growth of the Brazilian economy for the next 5 years, and the emphasis on new infrastructure, the environmental industries market is expected to grow by 10% annually.

Infrastructure

Infrastructure is the key to the Brazilian government’s economic expansion over the coming years, with Brazil looking at investments of over $262 billion. The 2014 World Cup, the 2016 Olympics, and the federal government infrastructure programs  on roads, railroads, ports and airports offer a broad range of business opportunities for foreign infrastructure firms.

Life Sciences

The life sciences sector in Brazil is among the 10 largest in the world and has averaged 4% growth per year since 2007.

Mining

Brazil offers great potential for mining exploration activities and an expanding market for mining equipment and services due to its large reserves of natural resources. Mineral production in 2009 was over US$21 billion.

Oil and Gas

The investment plan of the Brazilian government-owned oil company Petrobras may represent the largest global business opportunity in the oil and gas sector between 2011-20. Petrobras anticipates it will invest $224 billion in exploration and development between 2011 and 2015. This represents real opportunities for firms servicing the oil and gas industry willing to undertake investment or joint ventures with local companies in Brazil. 

Energy

Brazil is targeting nuclear energy as an area for expansion in order to diversify its energy mix. This represents real opportunities for engineering firms as well as R&D companies.

David Thomas will be co-leading an International Business Visit Program in late 2013 to Rio de Janeiro and Sao Paulo. For more information on Brazil Access 2016, please go to: http://brazilaccess2016.com/program/ 

Finally, watch the August 2012 issue of "Think Global with David Thomas" which was made in Brazil: