Based on Moody’s latest comments on the Brazilian economy, the Financial Times (FT) blog beyondbrics claims Brazil is the best place to beat the crisis. “Stressed out about the eurozone crisis? Worried about bank CDS spreads? Perhaps it’s time you moved to Brazil,” starts one of last week’s blog entries.
Good Economic Management
The FT comes to this conclusion based on remarks made by the regional credit officer for Moody’s in Latin America Mauro Leos, at a recent Sao Paulo conference. Mr Leos noted that Brazil is a good economic position in the face of the current crisis and pointed out that during the last global crisis in 2009, Brazil investment rating went up.
This rise in rating was awarded because of Brazil’s response to the crisis and “the resilience that was shown,” Mr Leos explained. Management of economics is a criteria Moody’s look at when reviewing ratings – “one of the things that allows us to understand a country and better differentiate them is how they behave during a crisis,” he said.
Brazil managed the previous crisis well with only a brief recession during Q4 2008 and Q1 2009. Since then, the country has gone from economic strength to strength. Buoyant GDP growth last year is continuing this year, unemployment is at a record low and Brazilian investment is experiencing a boom with the highest inflows ever.
The FT emphasises other positive points in the Brazilian economy, particularly the solidity of banks in Brazil. Unlike many of their European counterparts, Brazilian banks have high capital reserves thanks to strict banking regulations. Brazil also has its external accounts in good order.
Moody’s, who raised Brazil’s rating last June to Baa2 with a positive outlook, are not troubled by the rising inflation rate in Brazil. Moody’s timescale for upgrades is usually between 12 and 18 months, and Mr Leos said the credit agency intends to review Brazil’s rating in autumn next year at the earliest.
Obelisk International shares Moody’s positive outlook for Brazil and firmly believes that with the financial uncertainty in Europe, Brazil is proving to offer the best – and safest – opportunities for investment. “There’s no doubt that Brazil is the place to be for investors,” says Gary Hardacre, CEO at Obelisk International, “as it has solid economic foundations and demand drivers that are difficult to match.” Record levels of investor confidence and foreign investment in Brazil would seem to prove that it certainly is time to move your investments to Brazil.
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Obelisk International offers select investment opportunities in Brazil in a range of sectors such as residential real estate, construction and social housing.