Opinion Bullish on Brazil
Why everyone wants a bite of Brazil big,stable,and growing very fast
RIO DE JANEIRO,BRAZIL Tom Jobim is famous for having written Girl from Ipanema, the sensuous,playful anthem of a sensuous,playful land. Hes almost equally famous for having said,Brazil is not for amateurs.
I lived a quarter-century ago in that Brazil where if you didnt have the jeitinho, or insiders knack for circumventing rules,you were toast. It was a Brazil of hyperinflation and runaway violence that mocked the words on the national flag: Order and Progress. I went down to the city morgue one day,researching a story about poor kids who surfed the tops of trains for kicks,and an official idly lifted the lid of a garbage can in which a young mans body was twisted like a corkscrew. I asked what had happened. He said hed been murdered by fellow inmates at a prison and stuffed in there.
No,Brazil was not for amateurs.
Today,Im not so sure. Certainly a lot of people suddenly fancy themselves as Brazil pros. They want a piece of the action in the big South American nation that posted 7.5 per cent growth last year. Oil discoveries,a commodities boom,sound economic management,political stability,the World Cup in 2014 and the Olympics in 2016 have combined to produce a Brazil fever that feels a touch heady to me.
Take your pick of the head-turning figures. There were 12 new Brazilian billionaires on this years Forbes list of the worlds wealthiest people. Foreign direct investment has grown at a compound rate of 26 per cent over the past five years and reached close to $48.5 billion in 2010. Consumer credit is taking off. In a land where loans were long hard to get,the net stock of credit increased 21 per cent in the past year. Streets are clogged with cars,restaurants full.
A bubble in the making? Its possible. But Brazilian banks have generally proved prudent,and macroeconomic policies now have a steady track record over three presidencies,one that has contrived to ease the worst extremes of poverty while satisfying international investors eager to put capital behind Brazils rapid emergence.
Breathless optimism replaces economic gloom. A new $22 billion high-speed train will link Rio and São Paulo. People believe their kids are going to live better than they do. Brazilians talk to the Indians and to the Chinese about investments; they feel the old powers are becoming marginal to the 21st century. China alone has invested $37.1 billion in Brazil since 2003,mainly in mining and oil.
What you think of this depends on where you sit. Id say its a good thing a lot of people are going to live a lot better before too long but also very disruptive. Brazilians and Indians and Chinese and Indonesians and South Africans do better in part because,thanks to technology,they can do what were once US or European jobs just as efficiently. Their gain is linked in some measure to American and European pain. I talked here to an executive of a major international cement company who said it had just divested interests in Portugal in order to make investments of over $1 billion in Brazil.
For now,emergent powers and the developed nations talk more past each other than to each other. Institutions lag a changed world just as the infrastructure of these emergent powers lags the speed at which millions of people are joining the market. Indeed,lack of adequate infrastructure and lack of education are two of the main brakes on countries like Brazil.
Im bullish on Brazil,but some of the new pros are going to get burned. Brazil remains a country of violent inequality. A few days ago a French tourist,Charles Damien Pierson,fell off the tram in Rio at the Lapa viaduct,slipped between a badly installed fence and the bridge,and tumbled to his death. Before the police got there,his wallet was stolen by kids.
Convergence will continue and in time separate the real pros from the amateurs in the new global economy. Roger Cohen
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