Investments: Brazils engine
Valor Econômico
There are good reasons to believe investment, item that led the growth of the Gross Domestic Product (GDP) in the first quarter of the year, will be the engine of the Brazilian economy in the coming years. The figures are impressive. The BNDES (National Development Bank) estimates that between this year and 2014, the sectors of industry, infrastructure and construction shall invest R$ 1.6 trillion (US$ 1 trillion) 62.2% more than in the 2006-2009 period. Few economies have now a perspective of investment like Brazil.
The President of the BNDES, Luciano Coutinho, attributes such strong demand for investment to five independent factors. The first is in the sector of oil and gas, moved by the discoveries in the pre-salt layer. The sector has planned investment of R$ 378 billion (US$ 236.3 billion) between 2011 and 2014. It should respond, this year, for 14.1% of the Gross Fixed Capital Formation. The second factor is in the electricity sector, which should invest R$ 139 billion (US$ 86.9 billion) in the next four years. Until 2013, the country should increase the generating capacity at 24,066 Megawatts, with prominence for the inauguration of the power plants of Santo Antônio and Jirau, in Rondônia. Between 2014 and 2019, the capacity will have a new increment, of 32,406 MW, with the entrance into operation of Belo Monte and Tapajós.
The third factor is in the agribusiness, "mainstay of the trade balance", says the President of the BNDES, of "unparalleled" capacity to compete internationally. In fact, with the accelerated process of urbanization of emerging powers like China and India, which together have more than two billion inhabitants, the market of agricultural products lives a historic moment of strong growth, excellent news for the Brazilian producers. Another relevant component of the investments is in the housing sector. And here, says Luciano Coutinho, "there is an avenue of growth". The real estate credit assets still represent a very small proportion of the Brazilian GDP - 3.8%, in the case of individuals.
Finally, there is the logistics sector, where the demand for investment is huge, but huge are the bottlenecks as well. "There is a clear understanding on the part of the Government that Brazil has serious logistics deficiencies. We have beautiful financial and telecommunications infrastructure, but we still don't have such logistics infrastructure", recognizes the President of BNDES.
To the needs of investment, the President of the BNDES adds another challenge, which is to create conditions to increase the competitiveness of the processing industry. "Brazil is a large urban economy and it cannot forgo having a sophisticated services industry that generates many jobs, and having a competitive manufacturing industry. Here we have a great challenge that is to consistently increase the productivity of the country", says Coutinho.
The volume of planned investment and the support to the industry impose the country the challenge of increasing the rates of investment and of domestic savings, still very shy compared to the ambitions of the Brazilian economy. Today, the investment is at 18.4% of the GDP. As regards the savings rate, it represents only 15.8% of the GDP. The President of the BNDES believes that planned investments should increase the investment to 23% of the GDP in 2014, a fact which, accompanied by strong productivity gains, would support economic growth of nearly 5% a year.