Brazil’s economy is booming, and presents a variety of attractive long-term investment opportunities, a panel of experts said on Wednesday.

“Investors that are looking for dynamic areas of growth over the long term know that that’s not going to come from the developed world. We know that the dynamism in the world economy is going to come from the emerging markets,” said Justine Thody, editorial director for the Americas at the Economist Intelligence Unit. “Brazil is the second biggest emerging market after China, so it’s difficult for a long-term strategy to discard being there.”

Speaking at HSBC’s Emerging Markets and Brazil Conference in Toronto, Thody pointed out that during the economic downturn in 2009, Brazil’s economy barely contracted. This year, it is expected to grow by about 8%.

“It’s absolutely booming,” Thody said.

The speakers pointed out that Brazil’s economy is in good shape, with unemployment at a record low level, and public debt at low levels compared to most developed countries. The country also has a strong and stable banking sector, according to Pedro Bastos, CEO of HSBC Global Asset Management (Brazil).

“The system is very well capitalized, it’s strong,” he said.

Bastos encouraged investors to look to Brazilian bonds and equities to benefit from the strength of the economy.

“Brazilian equities are among the best investments in the world,” he said.

He pointed out that the Brazilian stock market has outperformed all other emerging markets since 2004. Bastos expects this strong performance to continue in the years ahead. He calls for earnings growth of about 30% this year and 25% next year, which will help the Brazilian stock market climb by an estimated 17% in the next 12 months.

“The potential for growth continues to be very solid.”

As more investors around the world show interest in the Brazilian market, Bastos expects more investment funds and products to emerge that will cater to the international investing community.

Infrastructure, energy sectors poised for growth

The speakers agreed that the aspect of the Brazilian economy showing the most potential is infrastructure. In order to accommodate the continued development of its economy, the country requires widespread new infrastructure.

“We need to invest lots in infrastructure,” Bastos said. “This is the biggest opportunity to be had in the next four years.”

As the country prepares to host the World Cup in 2014 and the Olympics in 2016, these infrastructure needs will become a top priority, the panelists said.

“It will create a necessity to get things going very, very fast,” Bastos said. He estimates that these two major events will require the country to invest a total of $46.6 billion in new infrastructure.

The energy sector also shows strong growth potential. The panelists noted that the renewable energy sector has begun to take off in Brazil. In addition, Thody noted that the exploitation of deep-water oil reserves over the next few decades would provide a major source of growth.

“That’s going to bring on another huge source of economic dynamism,” she said.

Another area to watch is the country’s consumer sector, the panelists said. Wanja Nobrega, trade commissioner for the Consulate General of Brazil in Toronto, explained that as Brazil’s economy has begun to develop in the past two decades, a huge portion of its population has emerged from poverty. This has led to a much more robust domestic consumer market.

“The result of this is 20 million new consumers in the market, consuming everything from shoes to fridges to cars,” she said.

IE