Brazil: 'A Country That's Just Starting Its Upswing'
Here are some eye-catching stats about Brazil:
- It has the world's largest farm-trade surplus at $27.5 billion -- compared with the U.S.' $4.5 billion, for example.
- Brazil's GDP went from $1.340 trillion in 2003 to $1.838 trillion in 2007, for growth of 37.1%.
- Since early 2003, the Brazilian real currency has returned over 50% against the greenback, which is now trading at R$1.63 (ouch for me on this trip).
- Brazilian interest rates in early 2003 hovered around an incredible 26.50% but are now vastly lower at 12.25%, allowing for additional capital and credit formation.
- Brazil's trade surplus rose to $4.08 billion in May, its highest level so far this year. Brazil is now a net creditor that paid back IMF loans early. In fact, the government has started on launching a sovereign wealth fund to invest capital surpluses.
- The country reached complete energy independence in 2006. In 2007, renewable sources of energy represented 45% of total production, compared with a world average of 14%.
The only currency we hold now is the Brazilian real. If you grew up like I did, then having a holding in Brazilian currency, you would have been committed someplace. In the last five years, the Brazilian real has doubled in value against the U.S. dollar, so if you were a Brazilian and you put your money in the American dollar, you lost half your net worth in your home country. And the outstanding thing about that is that during much of that period the Brazilian central bank was supporting the U.S. dollar.This is but one example of how things have changed for Brazil over the past several years. The story of Brazil is exciting, and in my opinion, it all starts with two companies, Petrobras (PBR) and Vale (RIO), both of which which I will discuss in the next installment. This was originally published on RealMoney on June 24, 2008. For more information about subscribing to RealMoney, please click here.
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