Brazil’s not doing well with the Coronavirus pandemic on its hands, and the world remains largely critical of how the state has handled the pandemic so far. Recently, the country became the second-most fatality-struck region in the world, coming in after the US, with 43,000 deaths from the disease. Assuming that the trends continue, which they very likely will, given the government’s nonchalant response to the pandemic, our existing understanding of the Brazilian and global economy will have to be thrown out the window. If we must continue preserving our financial agency, we must look past the tragedy with an optimism that things will get better– and it’s only a matter of time before they do.
In this vacuum of information and knowledge, the only path left to us is constructing new analyses from scratch rather than relying on existing data. Instead, we need an anchor that can help ground our economic and investment decisions, a fulcrum of sorts that we can use to orient ourselves–and I have good news on that front. See, even though our understanding of the global economy has changed–the range of economic decisions remains the same since the pandemic has only made our economic needs more severe rather than changing them altogether.
This crisis only highlights that the overarching economic narrative was deficient in its understanding of economic dynamics with respect to investment flows that ought to be directed, what the need of the hour was, and what the individual needs to do. We always knew that we should invest in healthcare, it was clear that striving for greater financial freedom was the need of the hour and we needed to increase access to global markets to help create a prosperous nation. Now that we’re in the middle of it all–these deficiencies have been brought to light, and that is all. If we can overcome these deficiencies, we will go a long way in curbing and preventing future economic crises– at least by directing our investments to generate value for ourselves, across an economic system responsible for the provision of goods and services.
This brings me to the question of what we ought to do as financial agents living through a pandemic and who must continue making economic decisions? Specifically, within the context of the Brazilian real estate market and the market in Fortaleza.
Why Brazil and Fortaleza?
As Brazil becomes the next Coronavirus hotspot, it’s likely to exhibit the most prominent economic instability across all other nations. If I compare the US and Europe’s economies with that of Brazil’s, it seems clear that support mechanisms and regulations are far more robust than in the developed world. Particularly, since the 2007 GFC, market regulation and greater accountability have allowed administrative systems to keep a keen eye on how the economy is functioning– also making it easier to intervene when the time comes. While in times of economic prosperity, this control often overextended into financial oppression–it makes these central control systems particularly effective at containing the economic ramifications of the pandemic. While this drive to control stems from a need to homogenize and repress individuality, these economies will improve faster because of how deeply rooted the government is in their functioning. It will be even easier for the west to do so because they have the resources to overcome their struggles. On the other hand, Brazil won’t be able to do any of this, and that is the lynchpin for the argument I will present.
For perspective, the Brazilian GDP is a 10th of the US’s GDP as of 2018, the GDP per capita is 14% of the US and, most importantly, Brazilian health expenditure per capita is 10% of the US’s. There is no way that the country can overcome its Coronavirus struggles, considering the difference between the populations, it isn’t remotely as high as the financial resources available to either. Given these deficits in the Brazilian economy, there’s going to be greater economic upheaval here than other countries. This, I think, is the most important consideration for us because of how these dynamics are about to create one of the biggest consumerism vacuums in the country–to create buyers’ markets that will make huge amounts of money due to global trade differentials.
From the initial reports coming out of Brazil, the youth of the country is the most affected by Coronavirus–showing a 15% fatality rate (10 times higher than Spain or Italy). With an average age of 30 years–its safe to assume that the youth is the most economically active demographic across the country. We will find internal demand going into a major slump if the Coronavirus demographics retain these characteristic trends. Effectively marginalizing the households and domestic demand that accounts for the major transitions in the Brazilian real estate market. As this demand slumps, domestic wages fall, and consumer buying power decreases–you will find yourself in the perfect position to scoop up property at lower prices since domestic demand won’t induce price fluctuations anymore. There is no denying that the Brazilian real estate sector will remain a buyer’s market in the long run. This is going to be a characteristic of the global economy for a very long time.
Now that I’ve spoken of the real estate market and made a case for demand slumps in the economy–I think the time is right for me to branch out into certain important considerations.
A Plan To Make The Most Of A Pandemic
Expecting quick returns on a pandemic isn’t a good idea. The degree of fluctuations in the market doesn’t bode well for short-term gains because keeping ahead of the market isn’t easy at this moment. Even if you want to make short-term gains, you need to lay down a plan that can help you sustain your wealth such that it offsets possible losses generated during this time. The idea to invest in real estate right now is part of one such strategy that will pay off immensely once Brazil gets through the first wave of Covid-19 cases–assuming that the economy follows the same trajectory as the rest of the world.
The predicted demand shortage will force the Brazilian economy to open itself up to the rest of the global economy to exploit its existing export-oriented advantages. These new dynamics will have impacts on business, tourism, and travel to Brazil that will, in turn, help generate massive amounts of revenue upon the economy’s reopening. Let’s take a closer look.
Policy Implications Of A Demand Slump
I think it’s pertinent to start from the Brazilian administration’s response to the pandemic and the economic problems that will ensue. The slump in demand will become increasingly troubling that will require swift monetary policy adjustments to undo. Typically, monetary responses to demand slumps include lower taxes and interest rates to increase the volume of transactions taking place in the economy.
This will incentivize greater borrowing and reduce the country’s savings ratios to improve profit potentials for business owners in the country. When you compare cross-country effects, the cheap labor in the country and fewer artificial price hikes through taxation will induce foreign businesses and investors to move into the country. It’s also very likely that many organizations in the US will consider Brazil for their production/operational sites owing to the increasing tensions between the US and China. It’s already happening in Mexico, and these dynamics will also spread through Latin America–which is economically led by Brazil.
If you’re wondering what the current breakdown of investment in the country is, take a look:
- Oil and Gas–11.4%
- Automotive investments- 9.8%
- Financial and auxiliary services–7.6%
- Chemical products–5.1%
- IT services–4.1%
While the Netherlands is the country with the highest FDIs into Brazil, the US–currently on the second highest-spot–will also start pumping a lot of money into Brazil. The country’s already well-equipped with massive industrial infrastructure, and when you combine it with the cost reductions to boost demand–everyone will want to come into Brazil.
Other Sources Of Foreign Demand
We must never forget that Brazil has been one of the world’s most famous tourist destinations. Over 6.6 million people visited the country in 2018, and the revenue generated was equivalent to $6.3 billion. People go to Brazil for all sorts of reasons–it’s a beautiful country, and an affordable tourist destination. The place will become even cheaper with the government’s expected responses, and people will begin flocking to the country in masses once we’re past the Coronavirus pandemic.
I’d like to draw attention to the city of Fortaleza and its surrounding lands that have traditionally been known as the go-to places for tourists. The Brazilian government has paid extra attention to this region of the country because of the massive tourist volumes to establish the infrastructure that can facilitate tourism activities. There are also plenty of incentives for people looking to establish tourism facilities in the city, to increase the amount of money coming in from foreign visitors. Recently, two major European airlines also began landing flights directly to Fortaleza, which effectively cut down the time taken to fly to Fortaleza and making the region much more accessible.
What Does This Mean For You?
If you agree with everything that I’ve said so far, that is, about the demand slump, the policies to induce greater demand and the impacts on foreign markets–then, of course, real estate becomes a very lucrative investment opportunity. Whether for commercial or residential purposes, the foreign demand that will replace a slump in consumer demand is bound to generate a lot more money for you than you might realize.
The Brazilian economy has always been focused on improving its export capacities, and this propensity to highlight exportation will play a major part in helping it recover from the pandemic. Whether it’s business or tourist groups looking for places to settle in, after the initial shock, you’ll find rental and property values skyrocketing when we’re through the worst of the pandemic.
Above all else, I think its immensely important to move into the market right now over any other time in history. The more time you spend mulling over your decisions, the closer we get to economic recovery. The only way to make the most of this opportunity is by getting your hands on a property bound to rebound in valuations. Even as I write this, numerous real estate projects are ready for the taking.
I’m speaking specifically of a collection of turnkey beachfront villas along the coast of Fortaleza waiting for investors to inject capital in. Conveniently placed on an untouched piece of land near the main city, this gated community is great for anyone looking to relocate to Brazil or hoping to make rental income from these homes.
I want to share a few videos for you to see for yourself what the coastal waters of Fortaleza look like and the projected site for a new real estate development with BeachFrontVillas.
In Conclusion
While this pandemic is unfortunate, we cannot ignore the economic and financial impacts of the pandemic and what it means for us as individual investors in the global economy. Specifically, I am speaking of the opportunities that will arise once the worst is over–and the worst will be overcome, and we must sustain our optimism because that’s the only way we will have the strength to plan for a better future. If we can keep it together for just a while longer, we will find the world full of opportunities for us to grab on.
The Covid-19 pandemic is shuffling economic and financial decks around the world, now is the time for us to take steps that we find ourselves with a favorable hand. This includes recognizing the possibilities during moments of tumultuous uncertainty, those which we can capitalize on to create a better future.
Injecting money into the Brazilian real estate market, particularly in Fortaleza, would be a great move for anyone looking to build their wealth. All the indicators point out that the market is ripe for the picking, and if you move today, you’ll find yourself well settled for years into the future.
So, whether you’re ready to purchase or want more information on this amazing opportunity, call Jan at his US telephone at 203-599-1835, or email: sales@beachfrontoffers.com and check out their website here: http://www.beachvillasbrazil.com/
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#Brazil recently became the second-most fatality-struck region in the world, coming in after the US, with 43,000 deaths from #COVID19. Assuming that the trends continue, our existing understanding of the Brazilian and global economy will have to be thrown out the window. #expat
— Mikkel Thorup | Author & Podcast Host (@ThorupMikkel) June 18, 2020
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About The Author
Mikkel Thorup is the Director at EscapeArtist.com the oldest and largest offshore website in the world and host of The Expat Money Show podcast. He is also the author of #1 Best-Selling book Expat Secrets on Amazon. Mikkel has spent over 20 years in continual travel around the world, visiting more than 100 countries including Colombia, North Korea, Zimbabwe, and Iran. His goal is to help people just like you to generate additional streams of income, eliminate your tax bill, and take advantage of offshore structures so you can travel the world freely and never have to worry about money again. Follow Mikkel Thorup on Twitter @ThorupMikkel
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