Most ETF investors hold emerging market exposure, and Brazil may be the least risky, emerging market investment destinations out there. Here’s why.
Brazil’s economy grew 7.5% year-over-year ending September 31, and GDP expanded 8.4% year-to-date, writes Martin D. Weiss for Money and Markets. Conservative estimates put likely growth over 7% for 2011.
Additionally, Brazil’s budget deficit is 3% of GDP, foreign debt is almost zero and government debt will likely drop to about 30% of GDP in a few years.
As the Brazilian economy continues to grow, along with inflation rates, market observers now expect higher borrowing costs come January, report Matthew Bristow and Iuri Dantas for BusinessWeek.
Third quarter GDP increased 0.5% from the previous quarter and 6.7% year-over-year. Economists project that the economy will grow by 7.6% for 2010 and slow to 4.5% next year. Consumer prices jumped 5.63% in November year-over-year. The Central Bank has a target of 4.5%, plus or minus 2%. Central Bank rates currently sit at 10.75%.
Brazil has set up partnerships with South Africa and India through the IBSA dialogue forum, set foot in Africa and the Middle East and formed strategic partnerships with China and the E.U., according to Nima Khorrami Assi for Guardian. The Brazilian government is seeking to expand its own economic interests at the global level by offering raw material and commodities exports to its partners.
- iShares MSCI Brazil Index Fund (NYSEArca: EWZ)
- Market Vectors Brazil Small-Cap ETF (NYSEArca: BRF)
- iShares MSCI Brazil Small Cap Index Fund (NYSEArca: EWZS)
Max Chen contributed to this article.
Disclosure: None
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