Why this is important to Wisconsin businesses: An overall positive economic climate is leading to housing construction and the expansion of public services.
The current combination of low interest rates and controlled inflation signals a favorable climate for investment in Brazil. The new administration that took office in January 2019 has succeeded at implementing a variety of reforms, including a pension reform that indicates other important tax and administrative reforms may be coming. In addition, the end of expansionary fiscal policy with the state financing economic growth creates more concrete opportunities for foreign investors and suppliers. The privatization measures proposed by the government are projected to raise between $50 billion and $62.5 billion in the coming years. Given these above-mentioned trends, investment banks and economists are predicting that Brazil’s GDP growth rate will reach 1.2% this year and 2.7% in 2020. Analysts including Credit Suisse are also predicting rising consumption, signaling broader optimism for Brazil’s economy.
The construction sector is another bright spot. In the second quarter of this year, the sector grew by 2% more than the same period last year, after five consecutive years of decline. The main reason for the recovery is real estate construction, driven by household consumption of building materials.
In addition, a new sanitation milestone—expected to be approved this month in the House of Representatives—will bring basic services to Brazilian cities that lack them, and is expected to generate great interest among investors. Bill 3261/19 will change the current rules to bring more competition, scale and regulation. State-owned companies currently dominate the sector, but have failed to meet demand, and advances in service delivery have been very slow. Currently, only 83.3% and 51.9% of Brazil’s population have water and sewer coverage, respectively. The bill’s passage will also bring great opportunities for Wisconsin exporters active in sanitation and water treatment.