São Paulo – Economist Paulo Rabello de Castro said, in a talk at the Arab Brazilian Chamber of Commerce headquarters, in São Paulo, that Brazil is living a less ‘anxious’ moment than other countries, expanding the possibilities of investment and opening a window of opportunities into several sectors like agribusiness, steel, pulp and paper, ethanol, aviation, food technology and oil, among others.
According to Castro, the fact that the economic crisis arose in more developed countries brought Brazil a chance to be more prominent. "I am optimistic. The unfolding of the crisis is different from that of the Great Depression," said the economist. Among the differences mentioned are the prices of oil, above US$ 70 a barrel, and of raw materials. "This time we are trying to overcome the crisis with greater liquidity," he said.
"In the agricultural area, Brazil is experiencing a trend of appreciation in the price of export commodities. This helps explain why Brazil is doing so well," said Castro, who mentioned some examples, like soy and maize.
According to the economist, other positive factors are that Brazil has been reducing the nominal deficit in the public sector, reducing the benchmark interest rate and has been granted Investment Grade from international rating agencies. On the other hand, Castro said that the country must still work on the rates of investment in the country. "We are engaged with controlling inflation, but are not engaged with growth," he said.
From 1988 to 2008, the average growth of the Gross Domestic Product (GDP) of Brazil was 2.5% a year. "A country that only invests 17% or 18% of GDP does not have significant investment to grow 6% a year, to take us out of the trough of low growth," said Castro. To him, the target should be to reach growth of 6% a year by 2022. "This way, per capita income in Brazil would double and come closer to that of Europe," he said. According to him, the country could only grow at this rate if 25% of GDP were invested. "These 25% of investment rate should only come with tax cuts," he said.
Forecasts
Among the reasons to believe in the future of Brazil, according to Castro, is the growth of the young population that is reaching a certain degree of maturity. "In the next 20 years, 70 million young adults (aged between 20 and 24) should become consumers in Brazil," said the economist, who showed charts of Brazilian population pyramids to show that they are living great modifications. Currently, according to him, the average is 1.08 children per woman.
With the base of the pyramid concentrated on youths, the economist stated that it should be necessary to create more opportunities and that they will be an effective consumer population, which may change the economic profile of Brazil. "This demographic pressure is becoming favourable due to the macroeconomic stability of Brazil," said Castro.
Another reason for optimism, according to the economist, is the internal expansion in the country. According to him, this movement allows new states to become more specialized in agribusiness, in tourism and in the petrochemical industry, for example, generating greater migration and opening greater work and investment opportunities.
Castro gave a talk on Monday night (31) to around 70 people, mostly businessmen. Among those present were the president at the Arab Brazilian Chamber, Salim Taufic Schahin, the Marketing vice president, Rubens Hannun, the secretary general, Michel Alaby, the chairman of the Higher Board of Governors, Walid Yazigi, the administrative vice president, Marcelo Sallum, the treasury director, Nahid Chicani, director Sami Roumieh and former president Antonio Sarkis Jr.
*Translated by Mark Ament
