September 12, 2007

SAO PAULO, Brazil – Brazil’s economy expanded 5.4 percent in the second quarter, boosted by big gains in the industrial and service sectors, and it appeared on track to grow nearly 5 percent overall this year, according to government figures released Wednesday.

Still, gross domestic product growth for Latin America’s largest economy in the April to June period fell short of the 5.9 percent pace predicted by economists surveyed by Dow Jones Newswires.

The industrial sector drove the second-quarter expansion, surging 6.8 percent from the same quarter a year ago. The service sector expanded 4.8 percent, while the nation’s important agriculture sector posted a 0.2 percent increase.

Economists surveyed by Brazil’s Central Bank are predicting that GDP – which measures the value of all goods and services produced in South America’s largest economy – will rise 4.7 percent overall for 2007.

Brazil’s economy expanded 3.7 percent last year, and President Luiz Inacio Lula da Silva wants to boost annual growth to 5 percent amid criticism that the economy is expanding slower than the world’s other major emerging economies in China, India and Russia.

The second-quarter growth came as Brazilian consumers in droves bought new cars and other expensive goods because of easier credit brought on by falling interest rates.

The easing cost of credit is expected to continue in Brazil. The country lowered its benchmark Selic interest rate to 11.25 percent last week, down from a high of 19.75 percent in mid-2005.

However, there are concerns that Brazil’s economy could overheat. Analysts recently boosted their predictions for 2007 inflation to just shy of 4 percent.

While that remains below the government’s target of 4.5 percent, da Silva said Tuesday his administration will take steps to keep inflation in check. He wants to prevent a return to the nation’s boom and bust economic cycles that saw lengthy periods of double-digit inflation.

Brazilian Finance Minister Guido Mantega said Wednesday that Brazil’s growth is strong. Also, inflation is under control because the nation will maintain monetary policy aimed at producing slow, sustainable growth, he said.

“Consumption is robust, but within reasonable parameters,” he said.

Growth edged up 0.8 percent in the second quarter compared with the first quarter of this year, the Brazilian Census Bureau said.

25 September 2007

 ** NEWS FLASH **

We have just heard that Brazilian mortgages will be available to foreigners next year.  This will have a huge affect on property prices!

Reserve now – before the boom starts

Come and visit us in our London office or give us a call now! – land plots and city apartments coming soon……..

24 September 2007 

Well, we are back from Albania.  We loved it! 

The people were friendly, the scenery was amazing, the food was excellent, and the property market is really taking off.  I’m not sure about some reports I’ve seen on the country.  I expected to see masses and masses of bad construction everywhere – but this is not the case.  And most of the quality of construction is quite good too. 

But the reports of the prices are correct – ridiculously cheap for property in this part of the world – from €550 – €800/sqm.  But foreign investors/ buyers will need to be quick.  Locals and Albanians living overseas are snapping up property even before the first couple of floors are constructed.  And prices have been consistently rising over the past 24 months at 15% per year (actually!) – with even bigger increases to come.

So stay tuned, and register with us, as the first amazing development in this amazing country is about to launch………

For the full Albania Country Guide please contact us.

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COUNTRY BRIEFING

The Albanian economy is estimated to have grown by 5% in 2006, supported by buoyant domestic demand. This, in turn, was underpinned by a continued rapid expansion of bank credit, a surge in public investment late in the year and strong export growth. Data for industrial sales and machinery imports point to strong domestic demand in the first quarter of 2007, while exports also rose rapidly.

However, real GDP growth for the remainder of this year will be held back by Albania’s latest chronic electricity shortages. The power cuts that began in July will depress domestic output, while the surge in electricity imports will increase the drag on growth exerted by the trade deficit. Because of the electricity crisis we have lowered our forecast for real GDP growth in 2007 to 5%, from 6% previously. We continue to forecast an acceleration in growth in 2008, to 6%, on the back of strong domestic demand and an increase in public investment. However, there are significant downside risks to this forecast, related to the possibility that Albania will continue to suffer from severe power shortages throughout the forecast period.

The lek will continue to be supported in 2007-08 by large inflows of foreign currency from Albanians living abroad, as well as by relatively high interest rates on local-currency deposits. The lek will follow the euro more closely than it does the US dollar, reflecting the fact that Albania conducts most of its trade with euro zone countries. We forecast that the euro will strengthen against the US dollar over the forecast period, to an average of US$1.35:1 in 2007 and US$1.38:1 in 2008. We therefore expect the lek to appreciate in nominal terms against the US currency, especially in the first half of the forecast period.

Higher import costs will be only slightly mitigated by the forecast appreciation of the lek against the US dollar and a resumption of the increase in the current transfers surplus, as remittances from abroad rise modestly. We now forecast a current-account deficit in 2007 equivalent to 8.5% of GDP, up from 7.4% of GDP previously. We forecast a slightly smaller deficit relative to GDP in 2008, although the outturn will depend heavily on developments in the power sector.

Copyright 2007 Economist Intelligence Unit

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September 2007

The level of employment in the construction material industry increased by 4.4% in the first half of the year, according to the Sector Analysis of the Brazilian Association of the Construction Material Industry (Abramat) and of the Getúlio Vargas Foundation (FGV).

In June, according to data from the survey, the number of registered employees was 625,000, the highest in the calculated series since January 2004.

Of the 18,700 job positions created since December, the major contributing segments were those of metallic structure manufacturing (5,100), manufacturing of cement and fibrocement artefacts (2,600) and extraction of stones, sand and clay (1,500).

The majority of job positions were created in the southeastern and southern regions of the country. Highlights were the states of São Paulo (Southeast), with 5,400 new job positions; Minas Gerais (Southeast), with 4,000, and Paraná (South), with 1,900.

Indicators show that cement consumption recorded a 6.75% increase in the first half of the year, compared with the same period of 2006. The 8.7% growth rate for cement consumption recorded in the last two months alone, is higher than that of the first half of the year as a whole, which, according to the FGV, points to a trend of growth throughout the year. Domestic sales of steel beams recorded a 9.3% increase during the first half, and production rose by 9.1%.

According to calculations by the FGV and the Abramat, nominal revenues for the sector during the first six months of 2007 have risen by 10.3%. Domestic sales grew by 7.1%, and retail trade sales rose by 5.7%. Based on those data, the sector is forecasted to grow from 7.9% to 9.3% this year.

In the assessment of the Professor of Economics at the Getúlio Vargas Foundation (FGV), Fernando Garcia, who is in charge of the survey, the expressive figures recorded in the first half of the year are a result of the expansion in real estate credit.

In the first half, credit for habitation stood close to 7 billion Brazilian reais (US$3.37 billion), an increase of 67% in comparison with the same period of last year.

Trade Balance Surplus

Brazil exported US$3.257 billion and imported US$ 2.584 billion last week, a US$673 million surplus that drove the accumulated result for the month’s 13 business days up to US$1.663 billion.

The figures were taken from the August bulletin by the Brazilian Ministry of Development, Industry and Foreign Trade, containing overall balance of recent trade figures.

In the year, exports already total US$ 95.720 billion, an increase of 15% in comparison with the same period of last year. Imports grew more (27.5%), to reach US$ 70.072 billion. The trade balance surplus for 2007 stands at US$ 25.648 billion, a decrease of 9.4% compared with the same period of last year.

by Flávia Albuquerque