Heading Down To Rio
Anchor of CNBC's “Closing Bell” Anchor/Managing Editor of the nationally syndicated “On the Money with Maria Bartiromo”
We are headed to Brazil Saturday for the week. I will be filing reports from the largest and most populous country in South America next week.
Endowed with rich natural resources, Brazil's economy outweighs that of all other South American countries with large and well-developed agricultural, mining, manufacturing and services sectors. Agriculture accounts for about 5 percent of Brazil's GDP and 35 percent of its export earnings.
The boom starts with commodities but goes beyond natural resources because government policies have been successful in helping some 20 million people out of poverty and driving consumption. The country is the world’s largest producer of sugar cane, coffee and tropical fruits, and has the world’s largest commercial cattle herd.
Other important agricultural products include soybeans, corn, cotton, cocoa, tobacco, and forest products. Industry accounts for one-third of GDP, with well-diversified sectors ranging from automobiles, machinery and equipment, steel, textiles, cement, petrochemicals and consumer durables.
Contributing about 65 percent to GDP, Brazil's services sector is sophisticated, including telecommunications, banking, commerce and computing.
Brazil also has the largest rainforest in the world—located in the Amazon Basin—and is one of the world’s leading producers of hydroelectric power. In the past decade, Brazil has built a strong macroeconomic framework, including fiscal discipline, inflation targeting, and the flexible exchange rate regime.
While implementing reforms and prudent macroeconomic policies, the government, led by President Lula, has also moved to narrow the gaps between the rich and poor. There have been reforms in the pension system, a modest increase in the minimum wage, and welfare programs that have targeted millions of poor families. These social policies have contributed to boosting domestic consumption.
This is why big investors like sheikh hamad, pm of qatar and real estate tycoon sam zell have poured money into the country. Foreign money keeps pouring into Brazil. Today, the government is trying to rein in the red hot currency.
The real has been rising to some say- unsustainable levels and it is hurting domestic players, making brazil products too expensive. So the natural resource rich nation has begun raising taxes on lending and foreign investment. Still 10.5-billion dollars in foreign currency flows from trade, and investments poured in in March alone.
Brazils middle class population grew 24 percent in the last 4-years, moving 20-million people out of poverty according to BRZ research.
The country now gears up for 2 major economic catalysts with plans to ramp up infra structure and building ahead of the 2014 world cup and the 2016 olympic games.
But all the vibrancy has sparked worry as well. Will the country policies to rein in the real currency limit foreign direct investment and how will the country encourage long term investing rather than short term investing? More to come next week.
Next week: meet The winners of the booming story in Brazil.
Also we tackle the question: have you missed the move or is there still time to make big money in brazil and how?
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