- The Washington Times - Tuesday, February 5, 2008

SAO PAULO, Brazil (AP) Maria Nazare de Souza beamed as she showed off her newfound wealth: a two-chair beauty salon with a tiny two-room apartment above it.

After renting for years in the vast slum of Heliopolis, Mrs. de Souza and her husband fulfilled the almost unthinkable dream of becoming homeowners with the help of their savings and a loan requiring monthly payments of just $59.

Mrs. de Souza hopes she can soon use credit to replace her second-hand stove, microwave oven and refrigerator with new appliances. All around her in this slum of 180,000 people, trucks delivering plasma TVs bought on payment plans rumble by new cars and the concrete homes that are rapidly replacing wooden shacks.

While the United States teeters on the edge of a recession, an economic boom and easier credit terms have sent Brazil hurtling into a consumption frenzy as millions of people qualify for loans for the first time. With a stable economy, falling unemployment, booming exports and low inflation, banks are seeking a much wider customer base.

Well-heeled Brazilians and international corporations are pouring billions of dollars into Latin America’s largest country, which most authorities think is well-prepared to weather any global slowdown.

Gross domestic product for Brazil — also home to the region’s biggest economy — rose an estimated 5 percent for 2007, and the nation’s economy is expected to grow another 4.5 percent this year.

Underlying the boom is the high global demand for Brazil’s vast natural resources — the country is the planet’s top exporter of beef, chicken, ethanol, iron ore, sugar, coffee and orange juice. Brazil comes in a close second to the United States for soy exports.

And two major offshore finds by state-run Petroleo Brasileiro SA in the last three months could turn Brazil into an oil and natural-gas exporter and a prospective member for the Organization of the Petroleum Exporting Countries (OPEC).

So many apartment buildings are being constructed that cement sales are expected to rise 11 percent over last year’s record-setting total. Flights to Disney World are packed, as upper-middle-class Brazilians take advantage of their nation’s strong currency to make trips abroad. The Brazilian real, one of the planet’s fastest-rising currencies, last year gained 17 percent against the dollar and 7 percent against the euro.

President Luiz Inacio Lula da Silva is trumpeting trickle-down economic benefits for the working class as evidence of vast social change. He also expanded a social safety net of food money for the poor and promises jobs through a big increase in government-sponsored infrastructure spending. Tax collections have risen markedly in recent years, thanks to booming business and beefed-up collection efforts in a country notorious for tax evasion.

Authorities agree that Brazil’s traditional boom-and-bust economic cycles might be a thing of the past, but are divided over whether five years of slow and sustainable growth will help give masses of Brazilian have-nots their first real shot at advancing in society.

Brazilians born poor have historically been destined to die poor. Changing that would mark a huge social shift for the country and would be a coup for Mr. Lula da Silva, a former metalworker who rose to fame as a union leader and became Brazil’s first working-class president.

While Brazil adds millionaires at a record pace and the divide between rich and poor remains extreme, working-class Brazilians are acquiring goods that were previously out of reach, said Nuno Camara, a Latin America economist with the Dresdner Kleinwort investment-banking unit of Germany’s Dresdner Bank AG.

“Once you know you can get there despite your class and your origin, you have hope and you work harder. Before, when you had inflation, you just thought, ‘I can’t consume, I’ll just buy my rice and beans.’ ”

In the Heliopolis slum, Mrs. de Souza confirms she has more confidence about the future.

“I really don’t understand why, but over the past four or five years we have been able to save money, and it has become easier to get credit,” she said.

Not far from her house, construction workers lay the foundation for a complex of 192 two-bedroom apartments on the site of a razed dance hall where drunk patrons used to shoot each other.

A steady stream of prospective buyers — doormen, chauffeurs, mechanics, nannies, maids and young professionals — smile as they toured a model apartment with a tiny terrace.

All they need to get a mortgage on a $51,000 unit is a monthly family income of $1,700 — half what they needed for a similar loan three years ago.

“It is changing attitudes, because people see their neighbors buying, and that means they know they can do it,” real estate agent Salvador Rodrigues said.

On an avenue lined with more than 100 used-car dealerships, a 35-year-old gardener took the keys for his first car, a pint-sized 2006 Corsa hatchback made in Brazil by General Motors Corp.

Too nervous to drive it, he passed the wheel to his brother.

“I could have never done this three years ago because the loans weren’t available,” said Robson Augusto, who makes $450 a month. “Now I’m full of adrenaline. I’m leaving here in my own car.”

Nearly 46 million people are getting a boost from a program that provides monthly payments for food to poor families that keep their children in school and get them vaccinated.

Since families know they can put food on the table, they can use their meager earnings for other purchases, turning the program into an informal “microcredit” service, said Marcelo Medeiros, a U.N. economist in Brasilia.

Still, there is no proof that tens of millions of extremely poor Brazilians are benefiting from the boom, he warned.

“We have evidence of short-distance mobility — moving from poor to a little bit over the poverty line — but you don’t move from poor to well-established blue collar,” he said.

Mr. Lula da Silva said Brazil’s urban poor will get a big boost later this year as the government starts funding a multibillion-dollar public-works program to improve crumbling infrastructure.

“We’re going to turn the big metropolitan areas and many other Brazilian cities into construction sites, creating the jobs that we need to create and generating the distribution of wealth that we want to happen in Brazil,” he said recently on his weekly radio show.

Fernando Rodrigues, who sells construction materials in Heliopolis, said sales rose 30 percent last year.

“It seems like everyone has decided to renovate their homes, fix their plumbing, add new rooms and put down flooring,” he said. “I guess it is because of the economic stability that lets people plan, and easy credit that lets people pay in installments.”

BRAZIL AT A GLANCE

Population: 190 million

Population growth rate: 1 percent per year

Size: Slightly smaller than the United States

Life expectancy at birth: Men, 68.3 years; women, 76.38 years

Ethnic groups: White, 53.7 percent; mulatto (mixed white and black), 38.5 percent; black, 6.2 percent; other (includes Japanese, Arab, American Indian), 0.9 percent; unspecified, 0.7 percent

Religion: Roman Catholic, 73.6 percent; Protestant, 15.4 percent; Spiritualist, 1.3 percent; Bantu/voodoo, 0.3 percent; other, 1.8 percent; unspecified, 0.2 percent; none, 7.4 percent (2000 census)

Literacy: 88.6 percent

Per-capita gross domestic product: $9,700

Source: CIA World Factbook

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