Economic News Brazil/Regional News
This recently added section is destined to provide up-to-date and current information and press articles about Brazil´s economic, agricultural and real estate situation, as well as regional information (developments, tourism highlights, infrastructure etc.). Different from the literature section (https://real-estate-brazil.com/literature/), which contains more general and in-depth academic analysis and monographies, this section focuses rather on news and recent developments. The second part, “Regional News”, will be sub-divided into news for the different Brazilian states and regions (Rio de Janeiro, Bahia, Tocantins etc.)
Short comments about current economic and infrastructural developments below will be accompanied by corroborating links of Brazilian and International Media, mostly journal news, but also topic related publications and even short videos. Economic developments have a strong impact on the real estate market and the political and economic framework serves as a “confidence framework”, in terms of stability of expectations and security of investments. Each investor is well advised to keep these developments in mind.
1. Economic News – Updates and Current Developments in the Economic and Real Estate Sector
13. September 2019: The recently published article below foresees a propicious investment future in Brazil. Based on dates collected by the BNDES (Banco Nacional de Desenvolvimento Econômico e Social – National Bank for Economic and Social Development) between 2019 and 2022 an increase in real (not nominal) values of 2,7 % in terms of investments is to be expected. This corresponds to 1,1 Trillion R$ and reflects 19 different sectors in the economy.
15. – 17th September 2019: The capital of Rio Grande do Norte, Natal, hosts another edition of the Brazil-Germany Economic Meeting (EEEBA), an important event focused on relations between the two countries. With the principal topic being Brazil-Germany Partnership in times of global change, the event will bring together government officials and business leaders from both countries to discuss expanding investments and new forms of cooperation. While focussed on the bilateral relations between Brazil and Germany, the there developed approaches and models maybe be valid also for different international partnerships and possibly serve as blueprints.
29. August 2019: Brazil, a traditionally relatively closed and protectionist country, is increasingly opening up. A milestone on this way is the recent liberation of the visa requirement for citizens of Australia, Canada, the United States and Japan. This has led to a significant increase of tourism in Brazil, which reflects in the increased revenues from tourism. The article published in the official tourism site mentions an increase of 43,4 % in revenues in July 2019, compared to the same month in 2018.
The Brazilian Economy is resuming growth. The Gross Domestic Product (GDP) increased by 0,4 % in the second trimester of 2019, thus escaping recession. In comparison to the same period in 2018, the GDP grew by 1 %. This growth, among other, consists of a strengthening construction industry (2,9 % increase), while the share of the extraction industry (mining etc.) has declined (- 3,8 %).
21. August 2019: Debureaucratization is on its way in Brazil. The recently approved (21. of August, Senate) “Lei de Liberdade Economica” (Law of Economic Freedom) is actually a so-called “Medida Provisoria” (Provisionary Measure) which as been turned permanent by Congress Voting. It enacts a variety of economic and legal measures facilitating immensely economic endeavours, like diminished restrictions and registration obligations and in general facilitated procedures when it comes to opening and administering a company.
20. August 2019: The following promotional video was recently published by the Brazilian Ministry of Infrastructure. While each promotional publication, due to its inherent nature, tends to overemphasize the benefits and advantages of a given issue, the main tenets presented in this video correspond to the facts. Brazil is increasing investments in infra-structure (railways, ports, interstate-highways), turning the country every more attractive to international investors. The video is in english language.
13. August 2019: Brazil achieved today another important goal on the road to economic progress and market liberalism. The So-called “Medida Provisoria de Liberdade Economica” – Provision Measure (a prerogative of the Executive) of Economic Liberty – aims to facilitate the life of the businessman and entrepreneur in Brazil, intending to reduce bureaucracy, guaranteeing, on a wider scale, the freedom to pursue economic activities and dispensing of the need to obtain licenses for a number of branches and sectors. The MP was today voted on in the National Assembly, and will still have to pass in the Senate. Taking effect, it should stimulate economic activity, and with it renewed growth.
23. July 2019: Another important step towards greater competitiveness of the Brazilian future economy was performed today – the decision to end the gas monopoly of Petrobras. The new gas market can significantly reduce energy costs in industries and allow private investments in the industry, establishing a competitive market for gas production. Government plans to include replacing diesel-fired thermal power plants with gas as supply contracts expire. All in all, this will strengthen Brazil´s competitiveness and make it a more attractive target for investors.
21. July 2019: Brazil risk (“Risco Brasil”) and general risk perception diminishing: Due to the success in the approval of the pension reform, but also supported by a calmer international economic and trade framework, including the chance of lower US interest rates, the risk of investments in Brazil is decreasing and has reached the lowest level for the last 5 years. The Credit Default Swap (CDS), an indicator of risk perception, was negotiated one day before the publication of the article, at 128 points – the lowest value since september 2014. And Merrill Lynch sees a chance that the approved pension reform might induce a positive chain reaction, opening up room for additional reforms.
17. July 2019: After the closure of the Free Trade Treaty between the EU and the Mercosur, the first meeting among the members of the Mercosur will take place in Santa Fe, Argentina. Brazilian president Jair Bolsonaro will discuss the first steps towards the implementation.
16. July 2019: One of the strongest and most robustly growing sectors in Brazil is the Renewable Energies Sector. The US Consulting Agency Bloomberg just published a paper foreseeing 97 Billion US-Dollar Investments into Solar, Eolic and Biomass Energy. This coincides with – and impacts on – the real estate sector too, since the demand for large areas is growing.
15. July 2019: News Brazil: The de facto growth of the Brazilian economy did not meet up the previous expectations, but is showing now signs of recovery. In may 2019 the economy grew by 0,54 %, as published by the Banco Central. The recent closure of the Free Trade Agreement between the EU and Mercosur as well as the approved Pension Reform might contribute to higher growth in the near future, and already now increasing market confidence.
14. July 2019: Recently, the Estadão has published an infopage about ongoing privatizations and concessions on PPP (Public-Private-Partnership Basis), regarding Airports, Energy Sector, Railways, Mining, Oil and Gas, Road-Construction and Ports. The below info-graphics can be found under the below link, which shows privatizations and denationalizations that have already happened or are yet to occur. It shows also the type of operation as well as the market value. Privatization, if well regulated and planned, is an important step towards a liberalization of the economy and thus economic growth. It is part of the political agenda of the market-oriented minister Paulo Guedes.
11. July 2019: Yesterday the Pension Reform in Brazil was approved. This will stabilize the economy significantly and increase investor confidence in Brazil.
- For additional Information about the Pension Reform and its public misconceptions see: https://www.itau.com.br/itaubba-es/analisis-economicos/publicaciones/macro-vision/ten-common-misconceptions-about-brazils-pension-reform-pec-287
15. March 2019: While the initial months of Bolsonaro´s government could not quite meet the huge expectations placed into it after (and before) the elction, Brazil appears well positioned “to enter a new era of foreign investment that would have a powerful impact on the country’s infrastructure development and its economic fortunes following years of economic volatility. The goal of new President Jair Bolsonaro’s government is to increase total infrastructure investment via partnerships or privatization. The government’s ambitious plan to boost the economy includes doubling investment in infrastructure to approximately US$65 billion per year by 2022.” For further reading:
2. Regional News – Regional Developments
4. June 2019: Bahia maintains one of the highest investment ratios in infrastructure in Brazil. This reflects, on the one hand, a general increase in infrastructure investments in all of Brazil, on the other hand a very accentuated investment dynamic in Bahia state. According to information of the state government, between january and abril 2019 approximately 555 Million R$.
14. March 2019: The first estimates related to Bahia’s economic performance point to growth that should again follow the trend of Brazilian GDP, however, with a slightly lower projection than that made by Focus Bulletin of the Central Bank.
2. March 2019: The growth perspectives for the real estate market in Bahia are optimistic. Besides being one of the Brazilian states with the highest growth rates in the tourism sector (Praia do Forte, Sauípe etc.), a research recently conducted by the CNI (Confederação Nacional da Indústria), together with the ADEMI-BA (Associação de Dirigentes de Empresas do Mercado Imobiliário da Bahia) pinpoints a growth of 7 % in 2019. It further highlights that this growth will be observed on the litoral area as well as in the interior of the state.
25. February 2019: The projected bridge, 12,4 km long, that ought to connect Salvador and Itaparica, should increase the economic and touristic attractivness of the region significantly. The original idea of the bridge goes back to 1960, however was not realized until this day. While showing Brazil´s commitment to infrastructure development in general, it also is a testament to China´s increased economic interest in Brazil. Be as it may, the real estate market in the nearby region will profit from these developments without doubt.
10. April 2019: A decisive pillar of Fortaleza´s infrastructure developments is represented by the modernization and amplification of the International Airport Pinto Martins. The article below highlights some of the most important key aspects, among them a projection of receiving up to 20 million passengers per year. The airport was recently taken over by the German airport administration company Fraport (Frankfurt/Main). Fraport also as an administration contract for the airport in Porto Alegre, demonstrating the companies commitment with Brazil´s infrastructural future. The investments into the airport in Fortaleza will strengthen Ceara´s significance as tourism hotspot in Brazil.
Introductory Article and Video about Paraná and its touristic potential:
General Economic Facts about Paraná:
Rio de Janeiro
31. July 2019: The current government is planning heavy investments in the region in and around Ilha Grande, aiming at doubling tourism in the next years. The tourism potential is, estimated by Angra e Ilha Grande Convention & Visitors Bureau, bigger than Mexiko´s Cancun. Several international investors have declared their interest in investing in this region. However, there might be some kind of environmental impact – which should be reflected in a sustainable and ecological development.
Update 13. August 2019: The potential investments into the touristic development of the region will amount to approximately 1 Billion R$, targetting around 40 distinct items, like improvement of infrastructure, the construction of touristic complexes or a new desalinization plant.
05. July 2019: Paraty was officially recognized as world cultural and natural heritage by UNESCO. With it, Brazil has now 22 places the fall into this category. The classification of Paraty as world cultural and natural heritage was based on two aspects: first, culturally in relation to its historic center, and second, in relation to its exuberant surroundings nature, encompassing a 149.000 ha large area, including famous national parks and reserves like the National Park of Serra da Bocaina, as well as 187 islands.
14. May 2019: Paraty e Ilha Grande, em Angra, podem se tornar patrimônio mundial:
- https://g1.globo.com/rj/sul-do-rio-costa-verde/noticia/2019/05/14/paraty-e-ilha-grande-em-angra-podem-se-tornar-patrimonio-mundial-da-humanidade.ghtml – This article highlights the prospects of Angra dos Reis, specifically Ilha Grande, to become UNESCO world cultural heritage.
20. October 2017: Macaé is one of the fastest growing cities in the state of Rio de Janeiro, with record investments in infrastructure and commerce. One of the foremost port locations, it is a nexus for offshore oil platforms. The below article corroborates the enormous growth potential of Macaé, which will receive 25 new platform contracts in the coming years. This should, among many other investments into the (also touristic) infrastructure lead to a enormous valuation of the region.
Rio Grande do Norte
18. Juni 2019: São Miguel do Gostoso, part of São Miguel de Touros, is one of the most attractive touristic regions in Rio Grande do Norte. The below article highlights some of the advantages and benefits of this place and shows some touristic attractions, like the Calcanhar Lighthouse, as well as the numerous leisure activities in the region.
12. March 2019: The below summary highlights some of the main advantages to invest in the litoral regions of Santa Catarina, with Balneario Camboriú being a prominent example. Elevated social development and high rates of real estate valuation count among the foremost parameters.
01. July 2019: The state of Santa Catarina in general, with certain hotspots in specific like Florianopolis or Joinville, is one of the most developed in terms of infrastructure and tourism development in Brazil. The below article highlights some keynumbers, and also looks at the distribution based on origin of tourists.
12. August 2019: The newspaper article refers to the confirmed plan to extend the so-called “Rodoanel Suzano” – Rodoanel Mário Covas (SP-21) , one of the main transit points of São Paulo. It will expand, with new access point. This will alleviate the traffic situation in São Paulo and is one of several major infrastructure projects in Brazil´s largest metropolis. According to real estate analysts this should have an influence on the property market.
20. March 2019: News Brazil: The real estate market in São Paulo is consolidating. The article, published in Exame, highlights some of the tendencies, and states that already in 2018 the general demand for properties and real estate has, compared to 2017, increased by 30 %. This is a tendency bound to continue in the future, also flanked by the recovery of the economic framework and positive political-economic developments.
6. September 2019: Sergipe is one of the smallest and equally youngest Brazilian states, established in 1892. However, it is also one of the economically most dynamic and rapidly developping states. Investments in infrastructure have increased recently, and the contract for the concession of the airport of Aracajú, Sergipe´s capital, is one milestone. The article highlights the principal aspects, among them the perspectives of improving the performance of the airport significantly.
7. September 2019: Sergipe is one of the most promissing states in terms of renewable energy exploration, among them solar, eolic energies, but also natural gas extractions. It will thus represent a crucial part in Brazil´s future energy matrix, based on green and sustainable energies. Two larger companies are currently exploring natural gas reserves in Sergipe, namely Petrobras and Exxonmobile, with Petrobras only opening up an extraction capability of up to 20 million m³ per day.