A Nobel prize-winning economist has recently outlined why he believes Brazil’s economy has recovered from the global financial crisis so quickly and why he thinks that it is set for a period of sustained growth, pushing property prices higher and higher.
Property markets often see peaks and troughs. Periods of high growth can often be followed by a pretty heavy bump back to earth.Why is Brazil’s economy booming?
In a presentation in Denver to the National Association for Business Economics, Nobel Prize-winning economist Michael Spence gave several reasons why Brazil’s economy is set to continue to thrive:
· Brazil had no complex securitised financial investments
· They learned lessons from their own financial crisis of 1997/8
· The banks had lent on low ‘loans to value’
· The central bank responded quickly to the credit crunch
· Their economic managers displayed “a high degree of competence
Spence added: “Is this sustainable? Will they [the economy] keep growing? I think the answer is a qualified yes. I wouldn’t have said that 10 years ago.”
Growing middle class driving economy and demand for property
Spence also believes that the country’s middle-class is increasing in size because many Brazilians have become wealthier (through better paid jobs). This increases the demand for many goods and services including, of course, housing.
Brazilian consumers ‘have become rich enough for their consumers to buy the goods they produce’ reports the Wall Street Journal.
According to Wilson Amaral, the chief executive of Gafisa, one of Brazil’s big home builders, the country needs to build a minimum of 1.6 million homes every year just to keep up with the demand of new middle-class Brazilian buyers entering the market. This is in addition to a housing shortage estimated at 5 million homes.
So, as Brazil’s economy continues to grow, investors can be reassured by the worlds of this Nobel prize-winning expert. Brazil really is a country that is going places.
Are you looking to buy property in Brazil ? Ceara , Sao Paulo , Ilha De Itamaracá , Florianópolis , Genipabu
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Author
Nick Marr
I am an internet entrepreneur with a passion for driving big audiences and a love for real estate. I have had plenty of ups and downs which has given me the experience to help others launch their own businesses. I enjoy projects that save consumers time and money, challenge convention and add real value to peoples lives.