Brazil Overview
A Growing Economic Powerhouse

Brazil has a developing free-market economy that is the ninth largest in the world by nominal Gross Domestic Product (GDP) and eighth largest by purchasing power parity in 2019. Brazil is also the largest and most populous nation in Latin America. According to International Monetary Fund (IMF), Brazil's 2019 nominal GDP was R$6.826 trillion or US$1.868 trillion. GDP is expected to grow in the 2%+ range in 2020 and beyond. PwC projects that Brazil will grow to be the world's fourth largest economy by 2050. Brazil's economic and political outlook has improved dramatically with the election of President Jair Bolsonaro, who is pursuing an anti-corruption and pro-business agenda. Important steps toward fiscal sustainability are being implemented to liberalize and open the economy. A recent constitutional amendment will curb growth in fiscal spending for the next twenty years. The newly appointed market-friendly leaders in the new administration are striving for a true reform agenda - including pension and tax reform, and expansion of trade pacts. These constructive measures have significantly boosted the country's competitiveness fundamentals which will provide a better environment for private-sector investment and development. The markets have responded favorably with consumer confidence now near a five-year high.

Brazil continues to benefit from the convergence of long-term demographic, economic and political trends that are expected to support sustainable growth over the next several years. These positive long-term trends include attractive demographics, a growing aspirational middle class (median age is 29.6 years), newfound access to credit and mortgage products, a historically low benchmark interest rate (4.25%) and inflation rate (4.27%.)

All factors which should continue to result in resilient demand for housing and the development of other real estate products, energy, infrastructure,manufacturing, tourism, and countless other investment opportunities.

This is against the backdrop of Brazil's vault onto the world stage by hosting the Confederation Cup in 2013, the World Cup in 2014 and the Summer Olympics in Rio de Janeiro in 2016. Billions of dollars were invested into venues and infrastructure in preparation for these events. Currently, the Brazilian government is investing billions more in its national transportation and commercial infrastructure to leverage the export of its vast commodities well into the future. Exports amount to 14% of its GDP. The main exports are transport equipment, iron ore, soybeans, footwear, coffee, autos, automotive parts and machinery. It accounts for 25% of global exports of raw cane and refined sugar; it is the world leader in soybean exports and is responsible for 80% of the planet's orange juice. Large iron and manganese reserves are important sources of industrial raw materials and export earnings (source: Trading Economics.) Brazil has well-developed and diverse economic sectors and the economy is larger than all the other South American countries combined. Economic stability is driven by the diversity of key economic sectors including mining, manufacturing, commodities, services and tourism.

Foreign investors are drawn to Brazil, in part, because of an expanding consumer class with growing purchasing power, which leads to more demand for cars, appliances, electronics, clothing, and many other retail items. Foreign direct investment levels (FDI) in Brazil exceeded $88 Billion in 2018, the world's third highest total, trailing only China and the United States, according to figures by The World Bank. The United States owns the highest share of FDI activity in Brazil, according to the Central Bank of Brazil. The pace of foreign inflows into Brazilian financial assets is expected to pick up this year with investors attracted by President Bolsonaro's market-friendly policies. Goldman Sachs reported that Brazil has the potential to be one of the world's most dominant economies by 2050.

It is this combination of an upwardly-mobile population, sound fundamental economic policies, an economic recovery that appears to be well-rooted with growth expected to be in the 2%+ range in 2020 and beyond, a corruption probe that strengthened the country's institutions and corporate structure, reduced inflationary pressures that has allowed the central banks to lower interest rates, and other positive trends that creates vast, long-term opportunities for investors.