A Nobel prize-winning economist has recently outlined why he believes Brazil’s economy has recovered from the global financial crisis so quickly and why he thinks that it is set for a period of sustained growth, pushing property prices higher and higher.
Property markets often see peaks and troughs. Periods of high growth can often be followed by a pretty heavy bump back to earth.
Why is Brazil’s economy booming?
In a presentation in Denver to the National Association for Business Economics, Nobel Prize-winning economist Michael Spence gave several reasons why Brazil’s economy is set to continue to thrive:
·: “Is this sustainable? Will they [the economy] keep growing? I think the answer is a qualified yes. I wouldn’t have said that 10 years ago.”
Growing middle class driving economy and demand for property
Spence also believes that the country’s middle-class is increasing in size because many Brazilians have become wealthier (through better paid jobs). This increases the demand for many goods and services including, of course, housing.
Brazilian consumers ‘have become rich enough for their consumers to buy the goods they produce’ reports the Wall Street Journal.
According to Wilson Amaral, the chief executive of Gafisa, one of Brazil’s big home builders, the country needs to build a minimum of 1.6 million homes every year just to keep up with the demand of new middle-class Brazilian buyers entering the market. This is in addition to a housing shortage estimated at 5 million homes.
So, as Brazil’s economy continues to grow, investors can be reassured by the worlds of this Nobel prize-winning expert. Brazil really is a country that is going places.
