Brazil’s consumers reach for their wallets

Most of the action in emerging markets in 2007 has been in Latin America, with the most buoyant major market being Brazil.

Most of the action in emerging markets in 2007 has been in Latin America. It was the world's best-performing region in the first half, notes Merrill Lynch, gaining 25% in dollar terms, and the most buoyant major market was Brazil, extending the bull run of the past few years with a 30% rise. The key driver over the past few weeks has been the prospect of Brazil being awarded an investment-grade credit rating within the next 12 months, as Handelsblatt points out. That would stimulate interest in Brazil from foreign institutional investors by making local assets appear less risky.

This also reflects Brazil's greatly improved economic performance over the past few years. Not only has debt fallen, but memories of hyperinflation have receded as inflation has fallen below 10%; interest rates are down from 26% in 2003 to 12% today. GDP growth looks set to reach the government's forecast of 4.4% this year, helped by exports (fuelled by the commodities boom) and, increasingly, local consumption.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
MoneyWeek

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.