Emerging Markets – Opportunities & Threats: Brazil
by Sterling J. Scott, Marketing Communications Coordinator, MHI | @mhi_sterling
Opportunities
Brazil will take the global spotlight with the 2014 FIFA World Cup games in June. The country has been preparing for the international men’s soccer tournament for the past seven years. Brazil has the world’s 7th largest economy and is the 5th most populous country. The country’s economy grew almost 3% in 2013 and its population grew almost 1%. 68% of the population is of working age and 87% lives in urban areas. These conditions are attractive to investors. As market sizes, manufacturing, and consumer spending increase in Brazil so do business opportunities.
Threats
Brazil’s economy grew 8% in 2010, after growing 0% in 2009 as a result of the economic downturn. The economy grew almost 5% annually, on average, from 2005 through 2008. The country’s quick recovery in 2010 was a positive sign for investors. However, Brazil’s growth dropped from 8% to 3% in 2011 and to 1% in 2012. The country’s stagnant economic growth is worsened by failed infrastructure projects – projects designed to spark further economic growth and help the country prepare to take the world stage for the World Cup and the Olympics. These projects include:
–A multibillion-dollar railroad with delayed production and no timeline for completion
–Bus systems that will not be completed until after the World Cup
–Incomplete and abandoned buildings
–Costly, delayed stadiums that has experienced many construction accidents
Conclusion
Ultimately, these conditions have not dissuaded investors and have failed to lower Wall Street’s confidence in Brazil’s market. So, investments are continuing. As long as the capital, goods, and demand for those goods continue to grow in Brazil, there will be opportunities there for supply chain and material handling companies. The productivity issues that have presented themselves during preparations for the World Cup have been attributed to everything from poor infrastructure development, government regulations, corruption, and even laziness. Whatever the cause, firms have the opportunity to offer solutions and build lucrative partnerships in one of the world’s premier emerging markets.
These companies should follow recommended strategies for capitalizing on supply chain trends and innovations in order to tap into Brazil’s potential as an emerging market.
More information on supply chain trends, recommended strategy, and innovations that drive supply chains are available in the 2014 MHI Annual Industry Report which can be downloaded at www.mhi.org.
