Tuesday, December 6, 2011

Brazil seems to be thriving


I´m not an economist - nor do I claim to be one on TV or the internet. But I have to say that Brazilians seem to be spending $$ in record numbers.

Luiz and I recently went to the mall to buy a computer. The place was PACKED! Not just the electronics\home appliances stores we visited - but the entire mall.

Wallets seemed to be open. People seemed to be buying. Sales people were definitely busy.

It did not look like a poor country to me. Brazil has changed.

Make no mistake - there are a gazillion poor people in Brazil - and consumer goods are rediculously expensive. But a trip to the mall had me thinking about everything upsidedown.

Who are these people with all this money? Why is this place so packed?

We don´t live in the richest of cities (although Niterói is consistently voted "Best Quality of Life" in Rio de Janeiro state...) Is it the credit bubble? Are people really able to buy refrigerators? I´m looking over my shoulder waiting for the other shoe to drop.

But there is home\apartment construction everywhere. There are municipal improvements happening at the library, the old city hall, the ferry terminal, road expansions. Looks like improvement to me...

Unless and until I hear a pop in a bubble, I´m going to hold on to the belief that things are getting better for many Brazilians.

Am I dillusional? What have you noticed?

10 comments:

Anita said...

The last couple of years there are many big Brazilian companies opening in Rotterdam and offering many jobs to the Dutch. (Unfortunately, I live very far away from Rotterdam.) The world is watching the fall of some traditional economies and the rise of others. Some institutions are very jealous. http://www.huffingtonpost.com/2011/03/08/china-brazil-growing-too-_n_832814.html

Alex said...

Of course I'm not yet in Brazil, but I watch things closely through different networking and forums.

You are certainly right about the home construction. In cities all around Brazil it looks like the cities are giant construction zones.

And as for the spending, I certainly hope its not a credit bubble...but I think it really is just the progression of those gazillion poor people moving out of the poorest class and moving in the the "C" class. It's really, really important for the maturity of Brazil to have a very strong C class. There is an established (and growing) upper class, but in order to reduce inequality the lower class needs to move up...which is happening!

I love talking about things like this!

Abracos,
Alex

GingerV said...

about 3 years ago I started to notice that stores and houses in Friburgo are now being painted colors - not no paint or white paint, but oranges and blues, yellow and a few rust. Unless you've never bought paint here you don't get this point. but paint about a gallon (course here is not a gallon but some liter equivalent), satina or exterior white runs about $R60.00 and a large can, about 5 gallen, is well over $R350.00. Colors are a luxery and much more expensive. So in the past no one painted their homes outside and now they do and in color - a definit sign of a better economy.
for the immediate everyone is flush with their 13 month's salery in their pockets. Friburgo has been a mad house for weeks now

Anonymous said...

Love your blog. There is a bubble in Brazil and is due to the commodities increase. Under Lula's presidency, Brazil shifted from being an exporter of industralized equipment to commodities exports. These commodities, most noticeable oil, have allow the government to finance the big welfare state. Although it allowed to take millions of poverty, in the long run, it does not build a strong economy. Nowadays, to confront the global crisis, the government is trying to estimulate the consuming to keep the economy going. Again, in the long run, we already know where it will take it. Just look at the US and Europe. If Brasil want to become a world player, it needs to invest in education and infrastructure. Otherwise like many times it occurred in its history, it will only be tomorrow's country. Brazil has an opportunity to seize the moment and make a change that will last for generation. But like any country, it is a price that no politician is willing to pay.

Anonymous said...

I think the idea that americans have about Brazil is completely wrong. Brasil is a big country, with a lot of wealth and so much poverty. it is a really complex country, that americans try to explain in only a simple thought - "poverty." It's sad to see how americans get only half of the real news and they think they know better than us (brazilians) than we do about ourselves. -Pedro Paulo (brazilian)

Ray and Gil said...

Pedro Paulo,

I totally see your point, but not only Americans, other foreigners read articles in newspapers or magazines and think they are experts in Brazil.
Most of them are often completely off and make comments that make them look like they don't have a clue about the reality of the situation.

Ray

Ray and Gil said...

Jim,

You are correct, Brazil is living a great moment.
It is a very complex situation, and many factors from several different points of the Brazilian and World economies have played an important role to contribute to the visible increase in wealth we are all seeing in Brazil right now.
Oil is a factor, Brazilian agriculture have bit their own records in size of crops and productivity for over a decade now, year over year.
The great welfare initiatives started by Fernando Henrique and continued by Lula and now Dilma are another important player. These welfare policies have helped poor people put their children back in school, instead of working to help feed the family. These kids are still in school and the results of the investment in their education will be seen 15 and 20 years from now...
The money this people is receiving from the government to buy food, toothpaste and soap is fueling several different sectors of the economy and generating countless jobs all over Brazil.
The economic crisis in the US and Europe has forced many companies in those countries to turn to Brazil to invest and grow their money, so Brazil is directly benefiting from that as well.
I am still not sure if Brazil has a credit or even a real state bubble, credit regulation is a lot tighter in Brazil and what happened in the US and Europe is very unlikely to happen down there. Real state prices are definitely inflated and will come down eventually, but you won't see a catastrophic crash like we saw in the US. You can only get a credit card in Brazil with a spending limit directly related to your monthly income, so people can't really go crazy with that, like we do in the US all the time. People can only buy houses with 20% down payment, so I think the possibilities and consequences of an eventual bubble would be mild at the worse case scenario.
We could write a book about all the reasons why Brazil is booming, and we can all agree that the country is moving in the right direction and millions are being lifted out poverty.

Ray

Shelley said...

I would agree with you (and many commenters) that I don't know if it's a bubble or not. But I would definitely agree that people have money are are ready to spend it. My husband and I are constantly amazed at the amount of people shopping, and very ready and willing to pay the going rate for what it is that they need. I was talking to a student last week about the increase in traffic in Belo Horizonte in the past year, and she said that people are buying cars like crazy, and the infrastructure here was not developed for so many people to have their own vehicles. I was also recently talking with a Brazilian about how hard it is to find good contractors/repair men/construction workers. There is such a HUGE demand for these kind of workers because people have the money to build. It will be very interesting to see how things play out in the next few years.

Maria Lívia said...

Well, you are correct, the Brazilian is getting things that could not before, because the minimum wage increased, inflation no longer exists ... we are really growing and we are not in a "bubble," a long way for this (I hope !)

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