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Survey finds foreign investors bullish on Brazil

By Stan Lehman
Associated Press / August 10, 2012
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SAO PAULO—Foreign investors remain bullish on Brazil despite a sluggish economy, one of the world's largest accounting firms said Friday.

The country's "stable economy, burgeoning domestic market and huge untapped reserves of natural resources have led foreign investors to become increasingly interested in Brazil as an investment destination," London-based Ernst & Young said in its Brazilian Attractiveness Survey.

The survey said direct foreign investment in Brazil has more than tripled since 2007, going from $19 billion to $63 billion in 2011.

The company said the report combines an analysis of foreign direct investment since 2007 with a survey of 250 global executives on their views about Brazil as a place to do business both now and in the future.

Brazil was rated by 78 percent of survey respondents as the most attractive destination for future foreign direct investment in Latin America. Eighty-three percent believed that Brazil's attractiveness as an investment location will improve over the next three years.

The survey said the information and communication technology and manufacturing sectors were the top two foreign direct investment sectors in Brazil in 2011.

It said "buoyant consumer demand and easy availability of credit has also led to investment in the automotive sector creating the biggest market in Latin America and the fourth largest in the world."

Ernst & Young's chairman and CEO Jim Turley said Brazil's hosting of the 2014 World Cup and the Olympics in 2016 "will contribute to infrastructure development and act as a catalyst to attract significant additional investment."

Richard Evans, head of the British-Brazil Desk at Ernst & Young, said Sao Paulo's bid to host the World Expo in 2020 should also help attract foreign investment for construction projects.

On the downside, the survey found a shortage of skilled labor that has led to higher wage costs compared to markets such as Russia, China and Mexico.

The optimism in the survey comes as the government tries to stimulate a national economy slowed by the global financial crisis.

In late June, the central bank lowered its economic growth forecast for this year from 3.5 percent to 2.5 percent. The Sao Paulo Federation of Industries has said that this year's gross domestic product will grow even less, by 1.8 percent.

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