Storm In a Teacup

They say when you are feeling seasick; you should look to the horizon to stop the queasy feeling. This is advice that could well be applied to the financial and property markets in some areas of the world at present.

Looking back over the ups and downs of the financial markets over the last ten years, you would expect that in another ten years time, we will be looking back at the last 18 months as just one of the downs in a time of great worldwide economic expansion. I’m sure when we look back from the horizon, the waves that we are experiencing now won’t seem half as big from a distance. 

Whilst there is a huge amount of speculation in the media about the state of the world economy and possibility of another recession in the UK and USA, world markets in general are still buoyant and the economies of the BRIC (Brazil, Russia, India and China) countries show no signs of slowing down whatsoever.

After analysis of the Propertyshowrooms.com traffic figures for January, “We have recorded a huge increase in interest for established, secure markets such as Australia, Cyprus and the USA and traffic figures are up 92%, 58% and 86% respectively in these areas. As well as the established markets, one area that is gaining attention from all over the world is Brazil, where we have seen figures more than 50% higher at the start of this year”.

Brazil is somewhere I can really see taking off:  As one of the true economic powerhouses, it is common knowledge that Brazil is tipped by Goldman Sachs to become one of the top 5 economies in the world by 2050.  With a GDP equivalent to half of Latin America and the recent discoveries of even more oil in the country, their economic position is only going to go from strength to strength.

Morgan Stanley Recently quoted  http://www.morganstanley.com/views/gef/archive/2009/20090922-Tue.html ) that they expect a FDI (foreign direct investment) recovery to US$30 billion next year. But these figures may start to look conservative if global healing consolidates further while Brazil remains a darling for the international investor community. For instance, if Brazil were to recover the market share of 3.5% of global FDI flows it enjoyed back in 1980, annual FDI flows into Brazil could potentially exceed US$50 billion in the coming years

Part of Brazil’s portfolio of titles include being the world’s largest coffee producer; 2^nd largest mobile phone producer; 4^th largest manufacturers of private aircraft; 6^th largest for cosmetics production; and it is are ranked 7^th in the world on the Foreign Direct Investment Confidence Index ($30bn expected in 2010) as well as being the 8^th largest producer of steel.  Brazil now, after 12 years, finally has a positive trade balance, indicating that the situation will be improving even further.

So, apparently it’s not all doom and gloom out in the troubled waters of the investment world and, whilst some countries may not perform as well as the people who have invested in them had previously hoped in 2010, there are still plenty of places that could surprise us all, and outstrip the growth of some of the more consistent locations; my money is on Brazil being one of those countries.

I would recommend to anyone out there feeling a little queasy about the markets to not look too closely at what is happening right now and to start looking out to the horizon, otherwise you may just miss the boat…...

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