Everyone is talking about the US becoming an energy superpower; I too have been guilty of it on this very page. However, for this month’s comment I would like to direct attention further south, focusing on Brazil, a country that is on track to become more prominent in the near future. Brazil is, of course, one of the key emerging markets and part of the BRIC group. It is also a rapid growth market and these markets have been earmarked as the ones to watch when it comes to boosting and driving the global economy over the next decade or so. Brazil is already in a fantastic position to become one of the world’s leading economies having weathered the financial crisis far better than most, especially the developed economies. The country is also rich in natural resources, benefits from macroeconomic stability and experiences continuous growing domestic demand.
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When it comes to our market, oil and gas, Brazil is tipped to be entering the main stage with the discovery of the presalt layer. Under this layer of salt, in the Atlantic between Brazil and Africa, there could be between 70 and 100 billion bbls of oil and oil equivalent which, if proven, will mean that Brazil has the 6th biggest proven reserves in the world, definitely pushing the country into the realms of an energy superpower. The discovery of this resource will create jobs, as investments are made in exploration and production as well as processing of these feedstocks once they are out of the ground. Additionally, the benefits of these discoveries will be felt in industries and markets indirectly linked to the oil and gas industry such as manufacturing. Brazil is lucky enough to be experiencing growth in other commercial sectors too. The automotive industry has entered a prosperous period, which has been associated with the comparatively buoyant economy being enjoyed. Also, with the FIFA World Cup being held in the country in 2014 and the Olympics in Rio in 2016, there is bound to be an injection of foreign investment as well as a boost to the country’s already strong tourist industry.
However, there are inevitably a few challenges that Brazil must overcome if it is going to be one of the world’s leading economic nations. The country’s infrastructure leaves much to be desired; it is low quality and, unless investments and enhancements are made, it will not be able to keep up with the rapid development of the country as a whole. Also, Brazil is home to a very complicated tax system and high interest rates, both of which can act as deterrents for investors and entrepreneurs, foreign and domestic. These fiscal concerns will definitely need to be addressed if foreign companies are to make large investments. Yet, one of the biggest problems the nation is facing is the lack of skilled personnel. This is being felt all over the world within the oil and gas industry, but in Brazil this is a problem being experienced by many sectors where a certain level of skill and training is required. Vast improvements are needed in the areas of R&D, technology, education and training if Brazil is going to be home to an impressive and attractive economy. Despite the above, Brazil has the potential to reach great economic heights, it just may well take a bit of extra work and effort to get there.