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Strong Fundamentals for Brazil Investment

Brazil was the first country to emerge strongly from recession this year. With most other nations still struggling to find their way out of the tunnel, it's more than obvious that we can all learn some lessons from Brazil. But what is Brazil's secret?
This was the question The Economist asked the Governor of the Central Bank of Brazil in an interview in its weekly column on financial markets. Introducing Brazil as a country that "has had a very good crisis", Greg Ip, the editor of US Economics, asked how Brazil has managed to ride out this worldwide recession so well.

The Governor, Henrique de Campos Meirelles, cited a trio of economic fundamentals - austerity in the fiscal budget, surplus in the balance of payments and controlled inflation. This three-prong economic policy together with tight control on exchange rates has meant that Brazil has, in the words of the interviewer, "come through exceptionally well".

There is plenty of proof of this exceptional performance. Brazil has already made up all the jobs it lost during the last quarter of 2008 - in the interview, Ip compares this to the US where employment is still declining. Consumer spending is up for 23rd month in a row. The Brazil stock exchange is going from strength to strength. And foreign interest in investment in Brazil is booming.

De Campos Meirelles explained that a key to Brazil's success has been to remove dependence on international markets. Brazil has a huge domestic market, keen to buy and take out credit, and this boom in national consumption is one of the factors behind Brazil's brilliant emergence from recession.

According to De Campos Meirelles, the ingredients behind Brazil's resurge of growth are also a trio - job creation, increase in income and ready availability of credit. With growth next year predicted at a minimum of 4.5% (Merrill Lynch are forecasting 5.3%), Brazil certainly seems to have found the right recipe.

Its "remarkable macro-economics" are just one of the attractions of Brazil, now one of the brightest opportunities for property investment overseas. Like the Brazilian economy, interest in Brazil real estate is soaring. Figures from Moneycorp show that enquiries about Brazil property rose by a massive 57% during August this year, proof that interest in property investment in Brazil is more than booming.

Last year was a good one for buying property in Brazil as illustrated by the over ?¢‚Äö¬§22 million Moneycorp clients in the UK transferred to Brazil for property-related transactions. But this year promises to be even better. A buoyant economy and rising consumer spending are two essential players behind any real estate boom. Add to this Brazil's huge potential for tourism on the back of the 2014 World Cup and the 2016 Olympics and you have another trio. This one is perfect for Brazil property investment.

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