After Ten Boom Years, Brazil’s Consumers Cut Back on Buying

The Boston Consulting Group: December 16
“Although the country’s weakening economy hasn’t affected employment rates or salaries to date, it is driving fundamental changes in consumer buying patterns… ‘[Companies will] have to adjust their cost structures, improve their innovation capabilities, rethink the value they deliver and focus on product categories with the greatest growth potential.’”

Brazil business hub to get more manufacturers exporting to growing nation
Birmingham Post: January 17
“Brazil is not a place to make a quick sale. Doing business in Brazil takes time, understanding and perseverance… A key tip for doing business in Brazil successfully is to foster personal relationships – the human element is crucial in Brazilian business culture.”

Breaking Into Brazil
Ottawa Business Journal: January 27
“Cleantech products such as advanced filtration, water distribution and reuse, rainwater systems and membrane filtration are in demand… There is growing interest in cloud computing, data centers and IT services… Opportunities exist for suppliers in advanced medical equipment, disposables, diagnostic devices, implants and components. [Also] half the security products used are imported, [so] firms are looking for solutions for financial institutions, port and airport security, vehicle surveillance and alarms…”

  • “…Companies should devote a good amount of time not only in evaluating the market but also taking the necessary steps to land the most suitable [strategic local] partner.”

 

Key Obstacles and Potential Solutions

Brazil Raises Interest Rates to Help Curb Inflation
NY Times: January 21
“Brazil raised interest rates to a more than three-year high on Wednesday, maintaining an aggressive pace of monetary tightening to arrest high inflation and win back investors disillusioned with the once-booming economy…. In an unusually terse statement, the central bank did not give any hints of what it would do next. It has promised to do ‘whatever is necessary’ to bring 12-month inflation back to the 4.5 percent midpoint of the official target range by 2016.”

  • “[While] Brazil’s real fell for a second straight day to 2.5836 per dollar…. [Brazilian finance minister] Levy is trying to regain investor confidence and boost the economy through spending cuts and tax increases, announcing last week higher levies on fuel, imports, credit and cosmetics” (Bloomberg Businessweek)
  • In a recent interview with Bloomberg Businessweek, Levy spoke optimistically about the future implications of Europe’s quantitative easing, China’s trade relationship and domestic tax simplification for Brazil. He commented on his efforts to sync Brazilian monetary policy with key trading partners such as the US during the country’s “adjustment period”.

Latin America in 2015: Manufacturing Aces, Commodity Bases and Basket Cases
Fair Observer: January 16
“It won’t be a year where you see a lot of drastic measures or a lot of volatility, especially for Brazil… this will be a year for getting things right and getting organized. A year for changing public accounts—sometimes, creating taxes, some increases in taxes—not only gasoline taxes, but maybe on some sectors that now have tax breaks…”

  • “Brazil is an important market for Nintendo and home to many passionate fans, but unfortunately challenges in the country… [like] high tariffs on imports and our decision not to have a local manufacturing operation…” (International Business Times)

 

Curated by Perry Nunes, Geoskope Junior Associate