The GDP from Ipanema
Avid news readers will have noticed increased coverage of the Brazilian Presidential election. Naturally there are comparisons with other recent elections between left-wing globalist candidates and populist contenders. In addition to filling the daily news cycle, Brazil is much more important economically than most people realize. West Capital International traders monitor their markets daily for a comprehensive view of what’s happening in the broad international markets. There is also a strong connection between Japan and Brazil.
Coffee was the main export from Japan at the turn of the 20th century and Japanese immigrants started arriving there in 2008. Brazil is now hosts the largest population of Japanese outside of Japan, estimated to be approximately 1.5 million. Japan is Brazil’s 7th largest trading partner. Brazil’s export include iron ore, steel, meat and non-ferrous metals. Japan’s main exports are cars and car parts, machinery and motors.
Brazil ranks as the 9th largest economy in the world, based on GDP. It is the second largest in the Americans after the U.S. – 19% larger than Canada. It’s a major commodity and agricultural exporter producing 80% of the world’s orange juice, 25% of sugar and the sole largest exporter of soybeans. They can easily pick up the slack from the trade dent caused by ongoing U.S.-China trade problems. It’s also the second largest iron-ore producer after Australia making it an important international player in global economic growth. Agriculture and mining attract the majority of foreign direct investment.
The country fell into recession in mid-2014. While it has been gradually emerging, the investment community favors the fiscal responsibility of a right-wing candidate, and with his military law-and-order background, he is expected to lead reforms of fiscal responsibility that are much needed to take this large but developing nation forward on the world stage. As West Capital Int. advisors like to explain to their clients, Brazil provides the materials for your breakfast, your breakfast table and your home so what happens there affects everyone.
The leading Presidential candidate, Jair Bolsonaro, is currently rattling cages in China. He envisions a strong Brazil as economically independent and is concerned about previous Chinese direct investment in their natural resources. China is already under pressure from U.S. trade issues and Brazil is an important trading partner for them. Should Bolsonaro win the election, he will be a significant player in the U.S. – China trade dispute and as such will have unusual leverage with both countries. Time will tell how if he favors the Art of the Deal or the Art of War. It’s a safe bet at this point he’s read both.
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