Opportunities in times of uncertainty.

Author:Ogier, Thierry
Position:COUNTRY REPORT: BRAZIL
 
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Brazil will bounce back after the current recession and a nail biting period of uncertainty--but how long will it take? What do investors expect for 2016? And who will be ready for the turnaround?

Latin America's largest economy has been going through another period of recession, but the transition may already be underway. However painful the adjustment may be, it has been weathered by most companies investing in Brazil. For some, it may be uncertain times. Business confidence has been badly affected by the Petrobras corruption scandal, and Congress may yet water down the government austerity package.

But opportunities are being seized for those who want to be ahead of the pack, and this will ultimately boost economic growth. "Brazil is still a complex place to do business, but it is a great market and there are a lot of opportunities in various sectors," said Helio Magalhaes, CEO of the Brazilian subsidiary of Citibank.

The concession program in infrastructure that was unveiled in June [TBC] has opened new avenues for investors, including those from China in the wake of Prime Minister Li Keqiang's visit to Brazil in May. Financing will be the key. "We are optimistic because we see a window of opportunity, but you still need to get a few things right," said Hector Gomez Ang, IFC's Brazil country head. "The transition from a public bank-led to a new model of financing with a greater involvement of capital markets is not going to happen overnight," he explained.

Indeed, there may already be some light at the end of the tunnel even for those industries that have suffered the most, such as car manufacturing. Carlos Zarlenga, General Motor's CFO in Brazil, feels that the recovery cycle, which started at the end of last year, will last between 18 and 24 months. "We think that the crisis is not a deeply structural one," he said. "Right now, we are seeing moderate growth in our industry in 2016 compared to 2015. We see 3-3.1m units for next year (domestic sales in Brazil) and getting better towards the second half of 2016," he said. "We are not looking at all at cutting our investment strategy. We remain committed to Brazil; we think it is going to continue to be one of the biggest markets for us globally. We remain extremely committed, and we are not changing our view at all from an investment perspective."

General Electric's Brazil CEO Gilberto Peralta has also confirmed that the planned $1.6 billion that were due to be invested until 2016 will...

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