After years of healthy growth and expansion, Brazil is beginning to feel an economic slowdown. Some economists are going as far as predicting no growth for the rest of the year, even suggesting Brazil's economy may already be in a recession. Along with the negative economic indicators, high inflation and a high cost of living are continuing to damper the economic optimism of many Brazilians.
While there is short-term pessimism about Brazil’s future, there are many factors showing how critical Brazil’s role is within the global economy in the long-term. Companies and organizations with operations around the globe should look at Brazilian investment with this long-term view.
Here are five factors that make me optimistic about the future of Brazil:
- Young Labor Force: Unlike economies like Japan with an aging workforce, Brazil has a very young workforce. As past trends have indicated, this is often a positive sign for a longer-term, healthy economy.
- Economic Growth: 2030 and 2050 might are far away, but according to projections from PwC*, Brazil is expected to be a major contributor to the global economy in the long run. Brazil is predicted to jump from the world’s sixth largest economy in 2012 to fifth in 2030 and fourth by 2050. Brazil’s strong ties with other explosive economies like China are positive indicators of this trend.
- BRICS Bank: After a meeting in Fortaleza at the beginning of July, the BRICS bank, long a dream held back by logistical details and demands between member countries, came to fruition. Comprising Brazil, Russia, India, China and South Africa, this endeavor demonstrates how these emerging markets are looking to challenge the established economic superpowers and play a more important role for emerging markets.
- Emerging Middle Class: Along with many of its neighbors in South America, including Peru, Columbia and Chile, Brazil’s middle class is growing in size and purchasing power. Even so, Brazil still struggles with significant income inequality and there are many challenges this group faces. However, an optimistic and politically engaged youth is hopeful for positive changes in the future.
- Global Super Power? Perhaps a point that has not been proven yet, but Brazil is beginning to act more like the economic power that it is. Recently, Brazil made waves internationally for taking a pointed stance on the crisis in Gaza. Regardless of agreeing or disagreeing with Brazil’s stance, this demonstrates Brazil’s desire to be heard and respected on the international stage.
While the immediate future is uncertain, Brazil will remain a critical destination of global investment in the long run.
Nick Lucido is a Daniel J. Edelman Global Fellow for Edelman working in São Paulo.
*Edelman client