As the Brazilian economy continues to push ahead, albeit at a slower pace than we have seen of late, it seems as though the United States of America and Brazil are going in very different directions. The US economy is teetering on the brink of yet another recession, Brazil is pushing ahead and the currencies are also going in very different directions. As a consequence, many people now believe that Brazil is emerging from the shadows of the United States of America and its historic reliance upon the USA is diminishing, but is this correct?
The Brazilian economy
Despite the fact that the Brazilian economy was initially expected to grow by 4% during 2012 the actual growth figure came in at around 1%. This was obviously a major disappointment although when you take into account the worldwide situation, currency difficulties and prospects for the future, any improvement in economic growth will obviously be well received.
Interestingly, despite last year's disappointing performance, many experts believe that the Brazilian economy will increase by around 2% during 2013 which is likely to be head and shoulders above the performance of the US economy this year. Indeed, there is a growing concern that as the budget crisis and debt ceiling issues have yet to be resolved by the US authorities there could be more economic shocks ahead.
Unemployment in Brazil
Unemployment in Brazil continues to fall dramatically as the economy grows, businesses continue to push ahead and the prospects for the future still remain fairly bright. The fact that investors in Brazil, and international investors, are willing and able to invest funds into the country despite the worldwide economic situation is obviously a major plus point for the region. It is also evident that Brazil is the leader in Latin America and as such it will benefit from the overall improvement in the economic environment and trading conditions.
The currency situation is obviously of concern because it does impact businesses on the ground especially those that export. The strengthening of the Brazilian currency was not totally unexpected because of the very different performances of the US and the Brazilian economies. How long this continues for remains to be seen because at some stage the US will recover, Brazil will be reined in a little after it's very impressive performance of late but whether we will see Brazil depending upon the US has much as it has in the past is a matter for debate.
Expats in Brazil
As more and more people look to move to Brazil it is interesting to see that the country is now talking to more overseas partners about trading relationships than it ever has done before. The region is prospering; unemployment is falling on an ongoing basis and while economic growth may not always be as high as initially expected, it is still very impressive compared to the worldwide situation and the likes of the US and the UK.
Against this backdrop it is not difficult to see why many expats believe moving to Brazil offers a number of attractions in the short, medium and longer term. The lifestyle in Brazil, the cost of living in Brazil, the prospects for Brazil and the economic performance of Brazil have changed dramatically over the last decade, something which has not gone unnoticed by the expat community.
Slowly but surely Brazil is pulling away from the shadows of the US on which it depended almost wholly in years gone by, at least from an economic point of view. There will always be a strong relationship between Latin America and the USA, Brazil and the USA but ultimately as the Latin American region continues to prosper, and Brazil continues to lead this group forward, reliance upon the USA will ultimately reduce in the future.
It is difficult to remember a time when international markets and international investors had so much confidence in the short, medium and long-term future of Latin America and in particular Brazil. We have seen financial crisis, we have seen political issues hitting the headlines, we have seen crime and corruption out of control but the situation today is very different.