Industrial Production Booms in Brazil

By Alison Kane

Fired by its huge domestic market, Brazil’s industrial sector has just achieved its largest drive since 2003. This together with 2% GDP growth in Q4 last year and the current huge interest in Brazil equities and Brazil real estate bring Brazil to the forefront of the world stage. Not for nothing is Brazil expected to achieve one of the highest GDP growth figures in the world this year.

According to statistics released this week by the Brazilian Statistical Institute (IBGE), monthly industrial production in Brazil was up 1.5% in February. The highest increases came in the editing and printing sector, which nearly doubled its production with a 97% hike; the pharmaceutical industry – currently in the spotlight for investment in Brazil – where production grew by 15.9%; and office and computer equipment with a rise of 15%.

Year-on-year figures are even more impressive. In February, industrial production rose by 18.4%. Compared with February 2009, 24 out of the 27 subsectors of industrial production improved their output. Within these subsectors, IBGE examines production figures for 755 products. 72% of these products increased their output since February 2009, the largest drive in the industrial sector in Brazil since 2003.

Two areas within the industrial sector appear as highlights: capital goods and consumer goods. These two areas have seen massive hikes in production over the last year in Brazil, particularly construction materials and household appliances.

Brazil is currently undergoing an unparalleled construction boom, driven by major investment for the World Cup and Olympics, and a booming real estate sector – Brazil will build at least 13.7 million properties by 2016.

It therefore follows that there is huge demand for construction materials in Brazil. Production of construction materials went up nearly 200% (196.9%) in the 12 months between February 2009 and February 2010. With one million homes due to be built in the low-cost property sector in Brazil by the end of this year, production of building materials will need to continue to rise to keep up with demand.

Sectors related to construction materials in Brazil also experienced vital increases. The metallurgy sector – Brazil is a major producer of steel – raised production by 35.9%. The mining and quarrying industries, which include the extraction of materials such as sand and gravel for construction, increased their output by over 20%.

Like many emerging markets such as China and India, Brazil has a quick-growing middle class. This middle class enjoys increased purchasing power and is hungry for consumer goods. In Brazil, this desire to own material goods is reflected in the rise of the production of consumer items since February last year. Car manufacturing grew by 20% – Brazil is one of the few countries in the world to experience a booming automobile industry – and the production of household appliances went up by nearly 25% for white goods and by over 44% for televisions and DVDs.

Brazil’s latest industrial production figures further confirm the potential behind investing in Brazil. As well as being on the brink of an unprecedented boom in construction and real estate, Brazil has numerous advantages. These include an economy that stood firm during the global recession, a booming domestic market and a vast supply of natural resources. Place all this together and Brazil undoubtedly offers some of the best investment opportunities available at the moment.

About Obelisk

For more information on investing and to find out about Obelisk’s latest projects, contact us on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: http://www.obeliskinvestmentproperty.com.

Obelisk also produces its Absolute Guide Series which contains the most recent investment information on 30 of the world’s top emerging markets. They can be downloaded free of charge at http://www.absoluteguideseries.com.

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