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Brazil Business Forecast Report Q4 2008Published by: Business Monitor International Published: Jul. 28, 2008 - 53 Pages Table of Contents
AbstractAll Eyes On The ConsumerOver the next decade, Brazil’s consumer will play a vital role in turning the economy into a regionalpowerhouse. We expect GDP per capita to almost double by 018 from 007 levels to US$1 , 09.We see massive wealth creation over the coming decade, with a booming economy and risingwages likely to take Brazil’s growth story outside the main metropolitan areas to smaller townsacross the country. At a time of falling retail sales in the US and eurozone, big retailers are lookingfor new lucrative markets. The boom in consumer spending seen in Brazil has already attractedthe likes of CBL & Associates Properties - among the largest mall operators in the US - to builda shopping mall in Macae, a traditional fishing village, which is at the heart of Brazil’s offshore oilexploration boom. We expect Brazil’s shifting socio-economic dynamics to continue attracting FDIwell into the long term. This will unlock significant infrastructure development projects in Brazil’smore remote areas, and in turn further stimulate regional economic development. We are watching the run up to the local elections in October closely and believe that a favourableoutcome for Lula’s camp would provide the president’s PT party with a strong foothold for the presidencyin two-year’s time. The ruling PT party continues to enjoy widespread support, particularlyin light of record high approval ratings for Lula. A recent Ibope poll suggests that 8% of voters approvedof the president’s performance in June, up from 1% back in December. Nevertheless, giventhat President Lula is constitutionally barred from standing for a third term, the continuation of a PTpresidency remains far from certain. Moreover, recent PT candidates endorsed by the president aspotential successors - such as the Lula’s chief of staff Dilma Rousseff - have quickly been discreditedin the media following a number of political scandals afflicting the president’s administration.Despite a slight moderation in Brazil’s monthly current account deficit to US$649mn in May, comparedto US$ . bn in April, latest current account data underscore our forecast for a US$ .1bncumulative deficit this year, equivalent to a projected 1.4% of GDP shortfall. Brazil’s year-to-datecurrent account pushed deeper into the red in May, to US$1 .7bn, on the back of a continuedsharp drop in the year-to-date trade surplus, compared to the same period in 007, and a rapidrise in the country’s income balance outflows so far this year. While Brazil’s trade balance willremain in surplus in 008, we forecast it to narrow to US$ bn, down from US$ 0bn in 007. Goingforward, although Brazil’s current account deficit will widen further in nominal terms in 2009, wenow project the shortfall to narrow to 1.3% of GDP next year. Thereafter, we forecast the currentaccount deficit to continue narrowing to just 0.3% of GDP by 2012. Brazilian state-run oil company Petrobras says it has struck oil reserves in the offshore Espirito SantoBasin. The news adds upside risks to Brazil’s oil reserves forecast, which BMI already expects to increaseover the medium term from 1 . mn barrels (bbl) in 008 to 18mn bbl by 01 . Petrobras informedBrazil’s National Hydrocarbons Agency that a well in the Golfinho field held estimated reserves of up to1 0mn bbl of oil. Petrobras said the well lay on a wholly owned concession and that it opened up newexploration opportunities in the Espirito Santos Basin. The find is near existing production infrastructurein the Golfinho area, which increases the likelihood of its coming on stream relatively quickly. Get Full Details About This Report >> |
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