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Brazil to burst out of recession? - 4 September 2009

The OECD is predicting 4% economic growth for Brazil in 2010, adding weight to the contention that the country is rebounding from the economic slump in an emphatic manner. So how is Brazil managing to emerge from recession quicker than other countries?

"Brazil is emerging from the crisis, and next year we are going to have surprising growth" President Lula da Silva said last month. A bold but not inaccurate statement, and there is enough evidence to suggest that it may be true.

President da Silva's efforts to reduce poverty in Brazil and initiate a massive expansion of the middle class has in turn stimulated huge growth in the market for property in Brazil - a sector that has been critical in the country’s resilience to recession.

"Whilst it would be spurious to suggest that Brazil’s property market is going to accelerate at the rates of recent years, it is highly unlikely that it will come to a halt for a number of reasons." said Samantha Gore, Head of Sales and Marketing for Brazil property experts www.uv10.com.

"At the heart of Government policy is its low income housing scheme ‘Minha Casa, Minha Vida - My House, My Life’ which, with the aid of cash grants and discounted mortgages, will create one million affordable homes for an ownership-hungry population."

Samantha continues, "Many developers are keeping themselves busy working on this project and are posting significant profits - a contrast to their Spanish counterparts who are tumbling into insolvency by the dozen. Brazil’s Central Bank is also doing its best to keep the economy moving and has taken bold steps to slash interest rates to their lowest level ever - 8.75% - a fifth consecutive cut for 2009 which brings rates down by five percentage points since the start of the year. This has led to an enormous expansion in first-time credit and a 20% increase in bank lending over this time last year."

Samantha concludes, "Add abundant natural resources, increased retail sales, strong investment in infrastructure, the FIFA World Cup 2014 factor and huge expenditure on tourism resulting in a massive 5.2 million international arrivals for 2008 - up from just 1.9 million in 1995 - and it’s clear why Brazil is making a sharp exit from recession."

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