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Global concerns and debate have continued to mount over the ‘currency war’ that has appeared in the forex marketplaces, largely as a result of the slow recovery of the US, with Brazil’s central bank governor Henrique Meirelles stating that the country is ‘not going to pay the price for economic imbalances’.  Whilst calling for open discussions at the November G20 meeting, the Brazilian authorities were nevertheless witnessed taming the appreciation of the Real – although the effectiveness of this has been questioned as a result of huge foreign inflows coming into country as result of the flotation of Petrobras (Meirelles stated further taxes on foreign capital flows ‘is possible’).  The influx of US dollars into the country’s international reserves stock (which hit their highest levels in 3 years) also prompted concerns by Meirelles of the risks of a credit bubble and he announced that measurements will be instilled into monetary policy to ensure this does not become a reality.

Housing markets across the country remained buoyant – supported by record credit lending and other factors such as lower unemployment and rising wages (see this months factfile).  In property related news, the Fundação Getulio Vargas reported a marginal drop in the cost of construction and the SECOVI organisation also pointed to a fall of 5.4 percent in the level of real estate sales in Brazil’s largest city, São Paulo.  The Brazilian Hotel Industry Association (Associação Brasileira das Indústrias de Hotéis, ABIH) expressed its concern with regards to a lack of sufficient level of construction of accommodation in the build up to the World Cup 2014 and Olympics 2016, particularly in Rio de Janeiro and the central west regions of the country.

A Bloomberg survey of economists showed the majority expecting accelerating growth and faster inflation in Brazil as 2010 draws to a close, furthering expectations that the SELIC interest rate will be raised further.  As last the first round of elections fast approaches, the ‘automatic pilot’ Dilma Rousseff (a phrased coined by a journalist due to effectively taking over what has already been created by Lulas Workers Party) saw her lead slighty narrow (against José Serra) due to the exposure of an alleged corruption scandal she was previously involved with.

Download: September / October 2010 Brazil Real Estate and Land Investor Newsletter