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Brazil:
From Emergence to Arrival

by Juan Pablo Cuevas, Treasury Sales Executive - Latin America, Global Treasury
Solutions, Bank of America Merrill Lynch and Fiona Deroo, International Subsidiary Banking Sales Executive – Americas, Global Treasury Solutions, Bank of America Merrill Lynch

Brazil has morphed into a powerful economic force, not only in Latin America but also for the new global economy. In recent years it has become fashionable for companies to look towards the BRIC nations (Brazil, Russia, India, and China) as vehicles for growth. As a result, Brazil has garnered its share of well-deserved attention. As the only BRIC country in the Western Hemisphere, Brazil has emerged as a favoured location for virtually any multinational company with long-term aspirations.  

Of course challenges persist in establishing operations here. Yes, the intrepid first-movers are already well-positioned in Brazil and enjoy a head start. But for those businesses interested in capitalising on an exciting, longer-term growth story driven by powerful secular trends, there is still time. That time is now.

A rich history of trade

To genuinely understand the Brazil opportunity requires some historical context. The Portuguese first colonised Brazil in the 15th century, leveraging its vast resources and using them as an engine of commerce. For hundreds of years Brazil has, in some form or another, figured prominently in global trade thanks to its valuable resources like sugar, coffee, diamonds and gold. Is it really any surprise that the country remains a commodities powerhouse and has re-emerged as a coveted trading partner?

Brazil has always been connected to Portugal, and for a time the Portuguese royal family even lived in and legislated from Brazil. The entrepreneurial and exploring spirit established by Portugal is firmly embedded in modern day Brazilian culture. Portuguese remains the official language of Brazil, and that by itself underscores how the country is very different from its Latin American neighbours.

A massive migration and shift from rural to urban society accelerated after WWII, and in more contemporary economic times, Brazil enjoyed varying degrees of prosperity mixed in with some wild swings of economic instability. Most famous and noteworthy were a currency and debt crisis, along with a severe bout of inflation. Its long battle with inflation finally ended in the late 1990s with, among other measures, the implementation of the Plan Real, which constituted a series of fiscal and monetary reforms that ultimately helped lower annual inflation from over 2000% in the early 1990s to single digits later that decade.

Fernando Henrique Cardoso, who was minister of finance and subsequently went on to be a two-term president, is largely credited with implementing many important economic and social improvements. With the pivotal victory over inflation and implementation of other reforms, Brazil seemingly has been able to shake off its volatile past and is now in a position to take advantage of its many inherent strengths. This is further supported by an established legal framework, one that is respected and offers a clear path for dispute resolution. Although often characterised as an emerging market, a strong argument can be made that Brazil has, in fact, already emerged.

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