LEADERSHIP INSIGHTS

Brazil is now out of recession, and as experts have predicted, is set to achieve high levels of growth. A sound infrastructure and relative stable political landscape mean that Brazil's economy can now thrive on a global stage. The upcoming World Cup and now Olympic Games in Rio will reinforce Brazil's status as a world-class economy, not to mention providing a confidence boost which will help as it enters a period of rapid growth and prosperity. 

A large part of Brazil's predicted success can be attributed to its resilience to the global recession. Ana Dutra, CEO, Korn/Ferry Leadership and Talent Consulting explains: "Unlike the US and the UK, Brazil was insulated from the worst of the recession for two reasons. Firstly, because it is used to operating in a recessionary, high-inflation environment and secondly, because there was less in the way of high-risk personal debt such as mortgages. There has, therefore, been great prosperity, optimism and growth in Brazil which continues to be a healthy economy. I believe that in 2010 we will finally see what has been predicted over the last five decades - Brazil becoming a powerful global player."

Clearly one of Brazil's key advantages, and the reason it has managed to avoid the worst of the global downturn, is its plethora of natural resources. Unlike other regions, the country is not dependent on exports and certainly not on financial services. Bryan Marcus, Regional Manager, South America, Volkswagen Financial Services explains: "It is well known that Brazil has weathered the economic storm better than most. Its enormous internal resources mean there has been less dependence on exports and its increasingly stable political platform has allowed the country to grow in a more structured and balanced manner, compared to other developing countries."

There are particular industry sectors where the Brazilian economy will see significant growth in 2010. Mark Spelman, Global Head of Strategy, Accenture explains: "The Brazilian economy is well positioned to take advantage of the improving global economic conditions in 2010. It suffered less from the financial turmoil than many other countries, has a strong commodities base, rising domestic consumption and a growing set of multinational companies operating on the global stage. Brazilian companies should continue to explore opportunities around globalisation, especially in the mining, metals, renewable energy and banking sectors."   

Looking more specifically at growth in Brazil for 2010, Abbas Hussain, President, Emerging Markets, GlaxoSmithKline has this to add: "Economic growth should be flat in 2009 and is expected to grow four per cent in 2010. The Rx market is growing at seven per cent in volume and 13 per cent in value. The pharmaceutical market is expected to grow at an average of 10 per cent per year for the next five years and offers great opportunities as more people cross the poverty line into middle class and the Government increases healthcare coverage and investment. Presidential and State elections next year should also boost spending on healthcare.

"A main area of concern and a barrier to even faster growth is distribution of wealth, which has been improving under President Lula's leadership but still requires significant efforts," Abbas continues.

Most agree that if Brazil continues in the direction it's headed, it will emerge a major superpower in 2010. Leaders should be watching how this market develops and be ready to take advantage of opportunities in this increasingly significant world market. Bryan summarises: "Brazil must continue to build upon its achievements, not least its success in balancing the economic, political and social needs of the country. The 2014 World Cup and the 2016 Olympic Games will only fuel growing self-confidence and hopefully ensure Brazil's economy becomes the power house predicted for so long."

"In general, Brazil will see attractive growth in 2010 and beyond, perhaps not as high as some of the other emerging economies like China but will certainly be one of the most sustainable markets given its sound economic infrastructure and relatively stable political environment. The recent announcement of the award of the 2016 Olympic Games to Rio de Janeiro is a demonstration of Brazil's renewed credibility and a reflection of the bright future ahead," Abbas adds.

As I am sure you can imagine, the BRIC nations and emerging economies are a hot topic across the Criticaleye membership. Leaders from most organisations are watching these economies with great interest, not least to find opportunities for their own growth and development. We have a number of articles and research papers on the issues involved online. These include Abbas's latest Criticaleye Review article, GlaxoSmithKline: Making an Impact on Emerging Economies, Emerging Market Acquisitions, a paper by M&A specialists Beyond the Deal on extending into these regions and Accenture's Are Emerging Market Multinationals Creating the Operating Models of the Future?.

Please let me know if you have any comments on the issues raised today.

I look forward to seeing you soon,

Matthew