Brazil on the Threshold of Change

Dale Potts
In August 2010 UK Secretary of State for Business Vince Cable led the delegation of 25 world-class UK companies to Brazil in the first ministerial visit between the countries since the May 2010 UK elections. Faithful+Gould's Tim Horner was part of the delegation.

Dr Cable engaged with business leaders and government representatives over four days in Sao Paulo, Brasilia and Rio de Janeiro. Co-chairing the annual Joint Economic and Trade Committee (JETCO) with his Brazilian counterpart Miguel Jorge, Dr Cable's agenda was to build closer ties between the countries.

Brazil is tipped to become the world's fourth largest economy by 2050. Rich in natural resources, an economic giant and one of the world's biggest democracies, the challenge now for South America's most influential country is to internationalise.

Strength of emerging economy

The strength of Brazil's emerging economy is an incentive to build trade and investment links to capitalise on financial prospects, Vince Cable said during his visit.

Speaking at the Economist Emerging Markets 2010 Summit, the business secretary noted that, by 2014, Brazil's economy will be larger than any European country. He said: "The bigger emerging countries - China, India and Brazil - have achieved very substantial growth and reductions in poverty levels based largely on an expansion of their domestic market and domestic savings."

With many major nations now recognizing Brazil's status as a global player, the UK is keen to encourage industrial cooperation in sectors such as defence and security, energy and advanced engineering.

Major sporting events

Foreign investment in the country is also being boosted by the 2014 World Cup and the 2016 Olympics. The Brazilian government announced that it would spend US$890 billion on upgrading the country's infrastructure prior to hosting these major sporting challenges. This will be much needed as the country has suffered a lack of consistent infrastructure investment and update for decades.

There will be considerable pressure on all sectors to overcome the shortfall in transport, leisure and hospitality facilities for 2014.

Rio de Janeiro, the World Cup host city, will need around US$17 billion in public and private funds to stage it successfully. 40% of that sum is expected to be invested in transport, to improve Rio's roads and rail network, and to boost the bus fleet and metro system.

Inward investment

Aside from infrastructure problems, Brazil offers a sound proposition for many global investors, and 400 of the world's 500 biggest companies are already operating here.

With its mature engineering and technology pedigree, the availability of good resource will help convince multinationals that this is an investment-friendly climate. The built environment is proving comparatively robust in recession, with Brazil as a whole well positioned to recover from the economic downturn.

Faithful+Gould is supporting several multinational clients, including the biopharma, oil and gas, retail/leisure and manufacturing sectors, with their inward investment initiatives in Brazil.