Brazil and Fellow BRICS Compete in Africa

The five BRICS leaders in Durban at the opening of the Fifth BRICS Summit. Photo by Roberto Stuckert Filho/PR.

Five of the world’s biggest emerging economies, which together make up the BRICS group – Brazil, Russia, India, China and South Africa – have met in Durban, South Africa, to take part in the fifth annual BRICS Summit.

While the event is aimed at cementing relations between the countries in a show of strength and unity that presents an alternative to Western economies, it is also expected to highlight growing competition.

The five BRICS nations now account for 17% of global trade and direct foreign investment in the grouping has tripled in the last decade, according to a UNCTAD report released on Monday.

The summit, held on 26-27 March, announced the creation of a BRICS crisis fund, the Contingent Reserve Arrangement, with an initial pledge of US$100 billion. Brazil and China have also signed a deal for a line of credit worth US$30 billion, shoring up trade between the two nations.

The fact that this year’s summit is taking place in Africa is significant: trade between the BRICS and African nations has increased tenfold in the past decade, the report says.

Trade between the BRICS and African countries has now reportedly even outpaced inter-BRICS trade, meaning fierce competition for influence over the fast-developing continent’s natural resources.

Due to China’s acute reliance on importing huge quantities of commodities and foodstuffs to keep its economy booming, it is by far Africa’s biggest business partner, with India a distant second. Although Brazil has reported to have ramped up its rapprochement with various African countries, direct investments in Africa remain low.

Despite the fact that demand for Brazilian imports across Africa has also risen sharply in the past decade – from US$1.35 billion in 2001 to US$12 billion in 2011 – Brazil has focused predominantly on Mozambique and Angola. Locations where major Brazilian companies such as Vale, Petrobras, Andrade Gutierrez and Odebrecht have set up African bases.

Yet China has made inroads into these countries as well, and therefore Brazil now has to compete for lucrative infrastructure, mining and exploration project bids.

Read the full article on The Rio Times.

13 March 2013

Wages Outpaced by Property Prices in Rio

Leblon is most expensive place for real estate in Rio, photo by Alexander Shafir (www.shafir.info)

The rate at which average Rio property prices have risen over the past five years is four times greater than that at which average wages have gone up, according to a report by O Globo newspaper.

Industry experts say wealthy Brazilians have encouraged skyrocketing prices, which have outpaced financing options for many and exposed a widening gulf between the richest and the rest.

In January 2008, a square meter of real estate in Rio cost R$3,851 (US$1,975) on average; five years on, it costs 124.2 percent more, R$8,636 (US$4,429). In the same period, the average monthly salary in Rio has increased just 24.2 percent to R$1,902.80 (US$971), according to the IBGE.

As a comparison, online surveys show a square meter in New York City costs approximately US$14,000 (US$1,295 per square foot), with average salaries of around US$4,000.

Renting in Rio has also increased, up over 65 percent on average since 2008 – double the rate at which incomes have increased. Some rents have increased by over 230 percent in Rio’s most sought-after areas.

Industry experts say the boom in prices stems from it being undervalued in the early 2000s and that an overdue “correction upwards” was made, leading to a sharp increase in prices to the present day.

Other factors also stoked prices, including the boom of the petroleum industry, greater access to credit, political stability and a reduction in violence. But it was the prospect of hosting major international events, particularly the 2016 Olympics, that gave many the green light to seek wildly high prices for their property.

Read full article on The Rio Times website.