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Is Brazil finally emerging from the shadow of its rivals?

Is the general scepticism about Brazil’s inclusion amongst the BRIC countries justified? The country is politically stable, it has a rising economy, a well-educated workforce and a burgeoning financial market of its own. Perhaps it seems too similar to India in the early part of the decade?  Certainly concerns about the sluggish approach to fiscal reform and worries about inflation contribute to a sense of unease. 

And yet, in February, according to Morgan Stanley Capital International Brazil became “the world’s largest emerging market”, as a rally for Brazil stocks combined with a falls in China left Brazil with a slightly larger market value: “now accounting for 14.95% of the MSCI emerging markets, it is also bigger than Korea, Russia or India”. And in the last few weeks, Standard & Poor gave Brazil its first credit rating, a step on the ladder reflecting the country’s booming economy and steadily rising GDP. At 5.4% a year it is less than the growth in other BRIC countries, India and China report 8.9% and 11.5% respectively, but it does represent firm progress.  

The emerging financial centre, Sầo Paulo, has over 20m people, the city’s university is the largest in Brazil and the third largest in Latin America. A sustainable supply of well-educated people, a developing economy and convenient geographic location; Brazil doesn’t have the ‘wild east’ reputation of Russia, the introspection of China, or the prospect of price/wage inflation that has bedevilled India. Perhaps it is this that is luring foreign investment? 

It would be missing the point therefore, to see Brazil as the new India for outsourced projects. We’ve all known for years that scouring the world for the cheapest day rate doesn’t usually get the best results for the project. What’s important today is the level of service and commitment, within a stable country, of course, but increasingly significant is an emerging market. Brazil’s new economy is not only well-placed but offers a rapidly growing banking sector of its own. For technology companies, particularly ones serving the banking sector, the country must now represent a logical investment prospect? 

As Sầo Paulo becomes South America’s financial hub, surely Brazil will emerge from the shadows of its BRIC cousins?


Graham Underwood, GFT

Comments: (1)

Matt White
Matt White - Finextra - Toronto 28 May, 2008, 15:44Be the first to give this comment the thumbs up 0 likes

Perhaps it is a sign of growing confidence in Brazil that the country's biggest IT services provider, Politec, said last month it will use some of the cash from an $80 million investment by Mitsubishi to try and crack the US market.

Not content with just picking up offshore work, the firm plans to open offices in Atlanta, Miami and New York over the next three years, creating hundreds of US jobs.



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