Brazil, hotbed of millionaire investment

Brazil on Monday received two pieces of good news in the field of business. Votorantim and Och-Ziff agreed to invest U.S. $ 308 million to develop real estate projects in the country, while Mercedes Benz announced the dispatch of U.S. $ 928 million to expand its production capacity in Brazilian lands.

Votorantim and Och-Ziff plan to form a partnership with residential and commercial developers, to establish an office for industrial and retail properties. The investments could increase, since it signed agreements with real estate across the country, Votorantim said.

"The agreement starts with 500 million reals, but our intention is to invest much more," said Silvia Benvenuti, head of real estate projects of Votorantim Finance. The property market in Brazil has expanded in recent years during a period of reduction in interest rates, giving the country's middle class access to mortgages for the first time.

Meanwhile, Mercedes-Benz do Brasil, a subsidiary of German car manufacturer Daimler said on Monday it will invest U.S. $ 928.2 million in three years to expand its production capacity. The plant trucks, buses and components in Sao Bernardo do Campo, Sao Paulo State, will expand its daily production by 25% during the period.

The president of Mercedes-Benz do Brasil, Gero Herrmann, made the announcement at a meeting with the president brasieño, Luiz Inácio Lula da Silva, and then with the state governor of São Paulo, Jose Serra.

"Currently, the plant is working close to its maximum capacity," said the company. The Brazilian unit of Daimler plans to increase the workforce, currently 12,000 employees, but not announced how many workers is recruiting.

Mercedes, the largest manufacturer of commercial vehicles of americas America, has a 31% share in the Brazilian market. Its truck sales grew by 31.5% between January and July in connection with the same period last year to 22,700 units.

Stability Brazilian tempts investors. This pair of ads are not an isolated phenomenon in the South American country. Rather, they reflect a trend that has been accentuated in recent times. Mercedes-Benz, Votorantim and Och-Ziff, joined a diverse list of companies that have decided to inject capital in Brazilian lands.

Just go over the public announcements of recent months: Bunge to invest U.S. $ 639 million in ethanol plants; ArcelorMittal, U.S. $ 1,600 million in the steel industry; Repsol, U.S. $ 1,500 million for the holding of two deposits; Fiat, U.S. $ 3,100 million until 2010 and Ford, U.S. $ 600 million to expand engine production, among others.

The reasons for the interest is largely due to economic management of the administration of Lula da Silva in late July, the risk rating agency Standard & Poor's praised the economic strength of America americas compared to the current financial instability, in addition the country's political stability. "The Central Bank of Brazil is correctly focused on keeping inflation at bay," said the rating agency risk, referring to the three hikes in the basic interest rate applied this year by the Brazilian Central Bank to face inflationary pressures ( see Brazil, the best in class 30/07/208)

In terms of growth, the Central Bank's projections for the country remain at around 4.8% this year, while for 2009 is around 3.73%. Meanwhile, the International Monetary Fund (IMF) said last Friday that the real growth of Gross Domestic Product (GDP) of Brazil would be around 5% in 2008, adding that the country had reduced vulnerability to a deterioration in the global economy ( See IMF: Brazil must contain domestic demand 08/08/2008).

Figures for foreign direct investment (FDI) in recent years backed the country's economic performance. According to the latest report of FDI from the United Nations Economic Commission for americas America and the Caribbean (Cepal), in 2006 the country attracted U.S. $ 18,782 million, while in 2007 the figure was a jump to U.S. $ 34,585 million. Only Mexico escort near Brazil, with U.S. $ 19,211 million in 2006 and U.S. $ 23,230 million in 2007.

The figures portend an auspicious picture. At a time when the financial market is experiencing a deep crisis, the largest economy in the region is steep as a reliable market that could infect the Southern Cone. Chile and Peru in the Pacific side, looming as the most stable countries to follow suit brasieño. Chile in 2007 attracted U.S. $ 14,457 million and is projected economic growth of 4.25% according to the IMF, while Peru reached U.S. $ 5,343 million and the agency projected growth around 7%, figures that support the potential of and that both economies can become another magnet for investment millionaire.

 

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