Search

Still strong: Business in Brazil

 

Betting on Brazil


Brazil's economy has cooled, but consumers in Latin America's largest economy are still going strong.

Brazil's economy has cooled, but consumers in Latin America's largest economy are still going strong.

 

 

 

 

 

 

 

 

NEW YORK (CNNMoney) -- Brazil may not be growing the way it once was, but there are still opportunities to be had in Latin America's largest economy.

After a commodities-driven boom during the past decade, Brazil's economy slowed substantially last year as global demand for raw materials waned.

 

The Brazilian economy is expected to grow just 1.5% this year, according to a recent forecast by the International Monetary Fund. That's down from a blistering 7.5% in 2010.

Despite the lackluster economic performance, Brazilian consumers have been surprisingly resilient, thanks to a sharp rise in the minimum wage and increased access to credit.

That bodes well for the Brazilian economy going forward. But investors still need to be judicious, said Nick Robinson, head of Brazilian equities at Aberdeen Asset Management in Sao Paulo.

Robinson likes Brazilian retailers that are well positioned to benefit from the nation's growing middle class. Ambev, a subsidiary of Anheuser Busch InBev (BUD), and Ultrapar Participacoes (UGP), one of the largest gas station operators in the country, are among the companies where he sees value.

"The interesting story is really what's going on in the domestic markets," said Robinson. "The demographics in Brazil are more favorable towards growth."

 

The automotive sector is another bright spot in Brazil.

Sales of cars and trucks in Brazil rose to a record high earlier this year as consumers rushed to take advantage of tax breaks announced by the government in May. While sales fell in September, analysts expect a rebound after the incentive program was extended through October.

The trend has been a boon for the leading automakers in Brazil, including Italy's Fiat (FIADF), Germany's Volkswagen (VLKAF) and General Motors (GMFortune 500), the No. 3 automaker in the country.

Read the full article.

Copyright © 2012 Multilingual Group Inc.
Follow us