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Brazilian asset management in focus, part 1 - Brazilian asset management growth in the near term - EY - United States

Brazilian asset management in focus, part 1

Brazilian asset management growth in the near term

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Despite inflation fears and growing currency concerns, Brazil's economy will likely grow in the near term.

A global economic powerhouse?

Among the weapons Brazil deployed in its battle against social and economic inequity was the extension of low-interest, government-backed credit lines to individuals. With access to this credit, Brazilian consumers have responded by going on a housing and consumer products sprees, which along with public expenditures on infrastructure, has resulted in increased trade with China, Europe and the US.

This growth has transformed Brazil into a global economic powerhouse.

As the country's economy continues to grow, its currency is appreciating. The stronger real has led to a widening trade imbalance. Brazilian consumers are taking advantage of a real that buys more foreign goods, creating a current account deficit of 2.31 percent of GDP for 2010.

President Rouseff has promised to continue building on earlier successful reforms and will likely leave government-backed credit lines open. Millions of newly prosperous constituents demand nothing less.

At the same time, Brazil has committed to cut billions in government spending in an effort to cool the economy and make Brazil's administration more efficient. These two goals may prove contradictory, but over the near term, Brazil may well continue its upward economic trajectory.



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