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  • English Conversation Classes: Talking about the Brazilian Economy in English

    Brazil is one of the world’s fastest growing economies and is tipped to be the world’s next superpower with economic growth expected to reach almost 5 percent in 2011. Economic experts predict that by 2050 Brazil along with Russia, China and India will lead the world’s markets. But what is it about the country that makes it a force to be reckoned with? Read the points and article below, then see if you can answer the questions, or take an English conversation class using this material.

    Brazil – Some Of It’s Strengths

    english conversation brazilVaried climate with at least five different sub climates including equatorial, tropical, semiarid, highland tropical, temperate, and subtropical.

    A complete range of natural resources due to biological diversity and numerous ecosystems,

    Highly developed industrial sector covering products as diverse as petrochemicals and computers,

    Its own oil reserves,

    Strong agricultural sector,

    High domestic demand for products and services due to a massive population of over 190 million people,

    Big labor pool as a result of its huge population,

    Strong government investment in science and technological development,

    A large and constantly expanding infrastructural network of roads, 2,500 airports and 36 deep-water ports.

    Brazil – Some Of It’s Weaknesses

    High inflation,

    Excessive bureaucracy,

    Limited spending on education,

    High levels of extreme poverty,

    Need to develop export markets.

    Now that we are thinking about the Brazilian economy it’s a good time to read an article about the subject and answer some questions on it.

    Say Bom Dia to Brazilian Business (Newsweek)

    Their economy is strong, and they’re buying U.S. companies.

    By Daniel Gross, (published June 18, 2010)

    “Look out for the Brazilians and the Indians,” the CEO of a large Fortune 500 consumer products company told me at a lunch a few months ago. And he wasn’t talking about the World Cup. He was responding to a question about where the next wave of foreign investors in U.S. assets will come from. A few years ago, dealmakers were abuzz—and many analysts were fearful—about the prospect of sovereign wealth funds from the Persian Gulf and China shifting their strategies from buying U.S. government bonds to purchasing U.S. companies. Since many of those bubble-era deals exploded, the sovereign wealth funds have become much less aggressive about entering the U.S. market.

    But now there are signs that the Brazilians may be picking up some of the slack. Last week, Brazilian meatpacker Marfrig agreed to acquire Keystone Foods for $1.25 billion. As a result, the Brazilian firm will now become a key supplier to all-American fast-food chains like Subway and McDonald’s. According to Thomson Reuters, there have been eight transactions since last October involving Brazilian firms purchasing U.S. companies or assets from U.S. companies. And there are likely to be more.

    Brazilian firms are in a good position to start investing. Driven by a rising middle class, robust commodity markets, and trade with China, Brazil’s domestic economy powered through the economic crisis and the recession. Its banking system, which puts directors on the hook for losses, didn’t melt down in an orgy of speculation. The country’s large firms have healthy balance sheets, and the Brazilian currency has appreciated against the dollar. And like Brazilian soccer players, who ply their trade in every league around the world, Brazilian executives are increasingly comfortable going global. A KPMG survey of executives from 17 countries that was released in March found that “Brazilian businessmen are the most optimistic in the world regarding the behaviour of global economy next year.”

    The acquisitions have centered mostly on large-scale, old-economy industries—the type that first gained national scale in the United States on the backs of the railroads in the 1890s: beer, meatpacking, oil, chemicals. InBev, the Belgian-Brazilian beer company, led the way in 2008 by acquiring Anheuser-Busch. JBS, the giant Brazilian meatpacker, bought Pilgrim’s Pride for $800 million last fall and then in January 2010 acquired Swift for $1.4 billion. It now has a very large presence in the United States. The same month, Petrobras, Brazil’s oil behemoth, bought a chunk of Devon Energy’s stake in the Gulf of Mexico’s Cascade field. In February, Brazilian resin producer Braskem acquired the polypropylene business of Sunoco Chemicals for $350 million. In April, Banco do Brasil, the big bank largely owned by Brazil’s government, which has outposts in Miami, New York, and Washington, D.C., received permission from the Federal Reserve to set up retail banking operations in the United States. “We will open 15 new branches in the U.S. over the next five years and we are also considering acquisitions of small local banks to build our operation,” Allan Toledo, vice president for international affairs at Banco do Brasil, told Dow Jones.

    This source of investment is much more appealing to U.S. nationalists and editorialists than cash coming from other members of the BRIC (Brazil, Russia, India, and China) bloc. The prospect of Chinese firms buying U.S. technology and oil companies has set off alarm bells in hawkish precincts. The Treasury Department is expressing concern over the notion of a Russian firm buying the ICQ instant-messaging service from AOL. Yes, some foreign policy analysts have worried that Brazilian President Luiz Inacio Lula da Silva is too cozy with Iran and Venezuela, but nobody has fretted about well-run Brazilian conglomerates owning well-known U.S. brands. That’s a good thing. For America needs Brazilian businesses—and businesses from all over the world—to take a new look at the U.S. market. For all its problems, the United States generally remains the largest single recipient of foreign direct investment in the world. Investments by foreign firms played an important role in last year’s recovery. And with the domestic companies and investors deleveraging and hoarding cash, foreign direct investment is vital to fund growth and expansion. Wall Street bankers should begin to learn some Portuguese phrases.

    Questions

    1. What has caused the buzz about Brazilian companies taking over US-owed ones?

    2. Why are Brazilian companies in such a strong position to start investing?

    3. How has the Brazilian currency (real) been performing against the dollar recently?

    4. What kind of US companies are the Brazilians mostly interested in?

    5. Do you agree that Brazil will be a leading world superpower in 2050? Why/why not?

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