Released at the end of May 2015, the latest Forbes list of the world’s most powerful women on earth ranked Brazilian President Dilma Rousseff at number seven, in-between Christine Lagarde, in charge at the IMF, and Sheryl Sandberg, Chief Operating Officer at Facebook. Compiled annually, the list assesses four criteria – the financial resources controlled by the candidate, her media presence, spheres of influence she is active in and how successfully she wields power. The latest Forbes ‘Powerful People’ list for 2014 positioned President Rousseff as 31st on the list.
Considering the size, population, economic power and investment potential in Brazil, investors shouldn’t be surprised how prominently the country’s president features. An indication of the increased dynamism and confidence Rousseff is starting to show in her second term, it is also a reminder of the power and immense potential associated with one of the world’s largest economies, and one of its leading sources of natural resources. A highly influential member of the non-aligned movement, the country’s ‘soft power’ leadership can be illustrated by its participation in numerous UN peacekeeping missions and in having a countryman, Roberto Azevêdo, in charge of the World Trade Organization since 2013. Might ‘soft power’ be converted into ‘hard power’? The country is making an assertive play for a permanent seat on the UN Security Council; success would make it the first southern hemisphere power in history to achieve that goal.
Brazil’s ascending geopolitical progress, already at a high pitch, is being replicated by its corporate and business profile. Most investors are aware that state-controlled Petrobras is one of the largest oil and gas exploration companies in the world, renown for its expertise in off-shore exploration, but how many also knew the country was also home to Embraer, one of the world’s largest aircraft manufacturers, specialising in aircraft seating up to 130 passengers, and Natura, one of the world’s largest cosmetic and health and beauty product companies? A number of catalysts are already in place to build on this success, the most important being the shake-up implemented by the country’s new Finance Minister, Joaquim Levy, who understands that encouraging private sector investment will be the key to cementing Brazil’s position as one of the most important investment and trade markets in the years ahead.
Two recent signs of Brazil promoting a more dynamic cross-border appeal within the region are:
- A freshly renewed agreement with Mexico that aims to double trade between the two largest Latin American economies, who account for 55% of the continent’s 558 million population and two-thirds of its $5.6 trillion GDP. On her May 2015 state visit to Mexico City, President Dilma Rousseff agreed to add agricultural and industrial products to their existing agreement, while expanding the terms to include services, electronic commerce and intellectual property rights. Although bilateral trade has already doubled to $9.2 billion a year during the last decade, there is significant room for further growth with this figure representing just 2% of the countries’ total exports. While Brazil and Mexico should be high up on each other’s list of trading partners, with Mexican investment into Brazil at $23 billion a year, neither breaches the other’s top seven. This ‘new chapter in the friendship between these two nations’, as concluded by Mexican President Peña Nieto post-agreement, will see increased bilateral cooperation and freer trade between the two nations.
- President Dilma Rousseff will visit Washington on June 30, 2015 to strengthen ties and trade between the two largest economies in the Americas. Relations with the US, a major market for Brazilian exports, have been stressed over the past two years after revelations that the US National Security Agency spied on the Brazilian President. With trade between the two economic powerhouses already exceeding $100 billion in 2013, and US foreign direct investment in Brazil reaching $80 billion in 2014, further strengthening ties will unlock access to their combined $19 trillion GDP.
Much closer business ties within the Americas is fundamental to boosting the macroeconomic strength in Brazil over the next decade. Already strengthening trade between Brazil and Mexico, Rousseff will now turn her attention to the United States. As a leading member of the Mercosur trade bloc with Argentina and Venezuela, Brazil will be well aware of the successes the Pacific Alliance (Mexico, Colombia and Peru) has had in stimulating trade by 90% to $560 million since 2005. A freer movement of goods, services, capital and labor between Mercosur, the Pacific Alliance and the United States will ultimately ease access to the region’s combined 920 million consumer-base and $22 trillion GDP.