Why we´d all love a Brazilia… economy, that is

BRAZIL is famous for stunning beaches, carnivals and great footballers.

But now the world is going nuts for something else – the country’s ECONOMY.

In just ten years, the South American nation has been transformed into a financial powerhouse. The new kids on the economic block came of age over the weekend.

The so-called BRIC countries – Brazil, Russia, India and China – were given more voting rights and seats at the International Monetary Fund, the organisation that oversees the global financial system.

This marks Brazil’s emergence on the global stage.

Bumper oil reserves and a booming agricultural sector mean the country’s economy could be bigger than Britain’s in five years.

The economic revolution is feeding national confidence – Brazil is hosting the FIFA World Cup in 2014 and the Olympic Games in 2016.

Ruth Lea, economic adviser to City stockbroker Arbuthnot said: “Brazil has done terrifically well. It just shows how the power in the world economy is shifting.”

The man credited – and taking the credit – for Brazil’s stunning revival is outgoing president Luiz Inacio Lula da Silva. The former trade unionist broke down in tears when Brazil bagged the Olympics last year. He declared the country’s time “had come”.

He stepped down this month with a staggering 80 PER CENT approval rating after two terms in charge. Critics admit he’s been influential and charismatic – but he’s also been very lucky.

Much of Brazil’s transformation has been down to China’s emergence. The “commodity boom” fuelled by China’s economic explosion fuelled bumper prices for Brazil’s iron ore.

And Brazil’s huge tracts of farmland are proving just as invaluable. More than 60 per cent of China’s imports of orange juice comes from Brazil, as well as a third of its soya and tobacco purchases.

Then there’s the oil. Three years ago Brazilian state energy giant Petrobras struck oil off the coast of Rio de Janeiro. The Tupi field could hold as much as eight billion barrels of oil – one of the world’s top ten discoveries.

Even bigger is the nearby Sugar Loaf field which could hold 40million barrels – on a par with the best fields in the Middle East.

No wonder Brazil believes it can become energy independent – a huge trump card in today’s fuel-hungry world.

Brazil was facing a financial crisis when Lula replaced Fernando Henrique Cardoso as president eight years ago.

But he pushed ahead with tackling inflation, bringing down sky-high interest rates and repaying all its foreign currency debts. Not only that, it lent ten billion dollars (£6billion) TO the International Monetary Fund last year.

Some 20million people have also been dragged out of poverty. But huge challenges still remain if Brazil is to finally arrive on the world stage as a super-power. Huge investment is needed in roads, railways and airports.

FIFA raised concerns this summer about construction delays in all 12 cities chosen to host football matches in the World Cup.

Lula’s successor also needs to cut back on the influence of the state – and do more on financial regulation to encourage foreign investment.

Flavia Cattan-Naslausky, currency strategist at Royal Bank of Scotland, said: “Brazil is on the cusp of a very important moment and needs to step up.

“Most of the macro work is done, it now needs some fine tuning.”