Why this is important to Wisconsin businesses: As the economy emerges from a three-year recession, opportunities exist for Wisconsin companies in the energy, agriculture, infrastructure and telecommunications sectors, among others.

After a three-year recession, and in spite of a high unemployment rate, Brazil's economy is growing again. As signs of improvement emerge, investors are beginning to show confidence in the economy’s recovery and taking risks. According to the iShares MSCI Brazil fund (EWZ), Brazil’s stock market is up 20 percent this year. Regardless of the economy’s current challenges, three fundamental facts remain:

  1. As a large country with abundant natural resources. Brazil plays a key role in supporting global economic growth: the world’s growing population and industry will need greater supplies of  the raw materials Brazil has to offer.
  2. Brazil’s growing middle class, which now constitutes 50 percent of the total population, has considerable purchasing power, and the size of this internal market creates opportunities for companies with innovative products and services.
  3. Unlike some other emerging markets, Brazil enjoys economic and political stability, and successive governments have maintained the same macroeconomic policies designed to tame the hyperinflation of the 1990s while reducing poverty. Ongoing corruption investigations should serve to make Brazil a fairer and more transparent place to do business.

As Fernando Pertini, CEO of Millenia Asset Management International in Panama, puts it: “If an economy of 200+ million people gets its engine started again...you’d better be on board.”

Opportunities in Brazil currently exist across sectors including:

  • Oil and gas. Petrobras’ local content requirements may be relaxed to enable greater participation in projects by international companies.
  • Energy. Recent power auctions have attracted major investment in wind and solar energy, after a water crisis highlighted Brazil’s overreliance on hydropower.
  • Agriculture. The OECD-FAO Agricultural Outlook for 2010-2019 identified Brazil as the “fastest-growing agricultural sector by far, growing by over 40 percent up to 2019.”
  • Telecom. There are 100 million Brazilians who still lack access to the internet.
  • Infrastructure. Significant capital projects are needed to make up for years of underinvestment. Plans are under way to attract private money into Brazil’s roads, rails, ports, airports, sanitation and health care systems, among other services. The country’s efforts to root out corruption are providing an advantage to overseas firms relative to the previous situation, where Brazilian companies were advantaged. Project financing opportunities may also open up as policies shift to be less favorable toward the Brazilian Development Bank and other state banks, which have long dominated the market.

Automotive, aerospace/aviation, mining and water are other Brazilian sectors Wisconsin companies should keep an eye on.