Sao Paulo, the heart of Brazil’s economy
The hostel in Rio de Janeiro was left behind when the crew boarded the local bus in order to head towards the long-distance bus station. This apparently simple trip faced two surprising challenges which delayed our eventual journey to Sao Paulo. Due to the language barrier, we had a small bit of trouble to find the right bus stop and the destination was known only approximately. Even though the right bus was eventually found, following our position on the map became a challenging task due to local driving habits. The traffic rules seem to be mostly suggestive by nature and the speeds do not seem to slow down whether or not there was dense traffic or tight curves.
The bus ride to Sao Paulo went smoothly and the quality of the long-distance bus was surprisingly something that Finnish bus firms have a long way to reach. After arriving to the city, the crew immediately proceeded to the Brazil’s largest bank, Itau, which has gradually become the tenth largest in the entire world. This is something that is part of the story of Brazil’s development. There are already many international and globally acclaimed firms, which besides Itau include e.g. Petrobras, Vale and Embraer.
At Itau, a sell-side economist of the bank gave us an insightful presentation on the Brazil’s economic outlook. The main message of the story was that the country’s rapid social development has created tens of millions of new consumers able to afford consumables previously unavailable to them. The drivers behind this phenomenon have been primarily favorable economic development creating new, more productive, jobs and secondly successful government policies addressing the inequality of income distribution. Even though the media visibility of Brazil has usually been overshadowed by the boom of the oil and gas industry, the rise of a new middle class will create immense opportunities for many companies.
An interesting side of the Brazil’s growth story is the shift from short-termism towards long-termism resulting from macroeconomic stabilization (which is in more detail discussed in our earlier post). As the inflation has been driven down, people, and also firms, have been able to make plans for the future instead of being preoccupied with the struggle for immediate concerns, or even survival. Gradually, it has also become increasingly common for people to invest in housing through mortgages which was previously virtually impossible. However, the consumer finance markets are very immature compared to international standards and the amounts of loans offered people are still very low despite their rapid growth. Therefore, potential worries of an overheating economy or housing bubble are not yet justified.