14 THE NEXT... SUPERPOWER
BRAZIL

Yes, we can!” declared President Lula of Brazil, cheek-ily echoing his US counterpart’s now famous soundbite and rubbing salt in the wound as Rio snatched the 2016 Olympics away from Obama’s Chicago. These days, the positive slogan seems to have far more resonance in this South American giant, where the flow of good news has grown from a trickle to a geyser, than in the anxiety-shrouded US.

Cynics may point to the the fact that no South American country has ever hosted the Games as the reason for Rio’s victory. But, politics aside, the International Olympic Committee – like FIFA, which has chosen Brazil as host for the 2014 World Cup – clearly saw enough in the city and the country to overlook Rio’s darker side. So what is finally thrusting this once sleepy giant forward?

Roughly the same size as the contiguous 48 states of the US, Brazil is rich in minerals and land, and it is this wealth of natural resources that is the foundation of its growing importance in the global economy.

The discovery of enormous oil deposits off the Brazilian coast has injected life into the country’s exploration industry, withestimates that the newly discovered fields may contain as much as 100 billion barrels. Big oil is rubbing its hands, and the national oil company has slated €118bn in spending between 2009 and 2013.

As well as an embarrassment of oil riches, Brazil has the world’s largest iron ore producer in Vale, a company that is increasingly strutting its stuff on the world stage. Vale did take a thumping hit during the worst of the crisis but prices for iron have come roaring back, thanks to renewed overseas demand, notably from China as a result of its government’s economic stimulus.

Size and fertility also make Brazil an agro powerhouse. A Brazilian tree takes seven years to grow to the size a Scandinavian tree takes 70 years to reach. Brazil is exploiting its territorial stretch by becoming an exporter of a host of soft commodities. It’s the world’s number one producer of coffee and orange juice and is second in soy. The country has even carried off the neat trick of being a producer of green power as well as petrol, through its extensive and lauded ethanol programme derived from sugar cane. Today, 90% of the country’s new cars are ‘flex’, vehicles that can run on any mixture of ethanol and petrol.

The domestic scenario is rosy too. A long stretch of good macro management means the financial outlook is benign. Brazil’s banks are making money hand over fist and no large Brazilian bank had to be bailed out in last year’s banking crisis. Spain’s Santander, facing a stagnant market at home, has sensed the zeitgeist and raised over €5.4bn through an IPO of its Brazilian unit, most of which will be spent on a huge expansion programme.

In fact, the country is enjoying a huge consumer boom on the back of lower interest rates, which are helping people buy TVs, cars and houses, often for the first time. Despite the splurge, the level of consumer debt to GDP at some 45% remains far lower than developed countries, giving plenty of scope for more.

Then there is the country itself. Beautiful beaches and equally beautiful people, the rich culture and the seemingly perpetual party atmosphere has long made for a irresistable combination for tourists. Investment in infrastructure and security for the World Cup and the Olympics Games is likely only to boost numbers further.

Latin America has long been associated with political instability, spectacular corruption and economic stagnation and you don’t have to dig far for stories of Brazilians’ sketchy self-esteem. “Brazil is the country of the future … and always will be,” locals joke. The joke is wearing thin: Brazil is finally starting to punch at its sizeable heft.