Consider Brazil as a location for long- term investment
Brazil has much to offer the world and should be a welcome component in Canadians’ long- term investment strategy. The Latin American country is widely regarded as a major commodity producer and exporter of products such as iron ore, sugar, orange juice, cattle and poultry. Indeed, the country is the world’s largest coffee producer with 38 per cent of production, the largest sugar producer, largest orange juice producer, largest cattle and poultry exporter and second largest ethanol producer, to mention only a few of Brazil’s many attributes.
The country has also drawn the world’s attention to its huge, recently discovered pre- salt oil reserves, as well as the cleanest energy matrix in the world, with 80 per cent of the electricity coming out of hydroelectric power plants.
In the last 20 years, there has been a remarkable social transformation in Brazil fuelled by the restoration of democracy, macroeconomic stability and rising living standards. The country has a strong economic policy framework guided by fiscal responsibility, inflation- targeting and a flexible exchange rate, among other benefits, including improved income distribution.
The period of financial stability that followed a long and painful period of hyperinflation began in 1994 with the launch of a new stable currency, the Brazilian Real ( BRL). Stability has been underpinned by a strong banking system, monitored by careful regulation and supervision.
In the aftermath of the 2008 global financial crisis, the regulatory framework for banking, capital markets and insurance was further strengthened. In fact, Brazil is second only to Canada with the world’s most efficient banking system regulator, according to a recent survey from the International Monetary Fund ( IMF). The Brazilian Central Bank is ranked as the world’s second most efficient banking system regulator after the Canadian Office of the Superintendent of Financial Institutions ( OSFI).
The Brazilian government provided the development of its capital markets with an element of stability through a new infrastructure investment program, primarily focused on logistics, to address the lack of base investments in the last 10 years. The government is auctioning some $ 70 billion US in infrastructure projects over the next 25 years. About $ 35 billion US will be invested in the next five years. Partnerships with the private sector are now recognized by the government as crucial to cutting costs for businesses and taxpayers.
Another government initiative targets custo Brazil– the so- called “Brazil cost.” Brazil cost refers to increased operational costs associated with doing business with Brazil, making Brazilian goods more expensive than other countries. A number of taxes on electricity are also likely to be abolished, reducing some of the world’s highest bills by 10 to 20 per cent.
It is also important to acknowledge other dynamic elements that make this society attractive. With the fifthlargest geographical area in the world — after Russia, Canada, China and the U. S. — Brazil also has a privileged position as home of the world’s most biodiverse area, hosting nearly 12 per cent of the total world’s species. The Amazon region alone — nearly 50 per cent of the country’s territorial extension — is home to six per cent of the species known by science.
In closing, there are many political and economic reasons Brazil is seen as a good business opportunity, not to mention a dynamic venue for the next Olympic Games and World Cup. Canadians looking for long- term investment opportunities would be remiss if they did not consider the vast potential Brazil has to offer.