- Title: BRAZIL: Downtrodden northeast rides a revival
- Date: 24th June 2010
- Summary: RECIFE, BRAZIL (RECENT) (REUTERS) GENERAL VIEW OF BUILDINGS IN RECIFE'S DOWNTOWN AREA TOP VIEW OF BUILDINGS AND CARS IN THE STREETS OF RECIFE CARS IN STREET LUXURY BUILDINGS IN FRONT OF BEACH PEOPLE WALKING ON THE BEACH SIGN OUTSIDE ELETROSHOPPING RETAILER STORE EXTERIOR OF ELETROSHOPPING STORE IN A MALL CLOSE OF HANDS OF HEALTH WORKER, LUCIANA REGINA FREITAS', HANDLING MONEY FREITAS PAYING FOR HER FIRST COMPUTER (SOUNDBITE) (Portuguese) HEALTH WORKER, LUCIANA FREITAS, SAYING: "I am entering Brazil's world of high technology." FREITAS LEAVING ELETROSHOPPING STORE WITH SHOPPING BAGS ELETROSHOPPING VICE PRESIDENT, FERNANDO FREITAS, IN HIS OFFICE CLOSE OF FREITAS' HANDS (SOUNDBITE) (Portuguese) ELETROSHOPPING VICE PRESIDENT, FERNANDO FREITAS, SAYING: "The growth in the northeast has had a cascading effect, generating jobs, income, consumption, and all these things helped a lot the northeast in the past two years." MAN OBSERVING STOVE AT AN ELETROSHOPPING'S STORE EXTERIOR OF CONSTRUCTION SITE WHERE A RESIDENTIAL BUILDING IS BEING BUILT FLAG OUTSIDE MAURICIO DE NASSAU COLLEGE EXTERIOR OF MAURICIO DE NASSAU COLLEGE PORTRAIT OF EDUCATION ENTREPRENEUR, JANGUIE DINIZ, IN HIS OFFICE DINIZ IN HIS OFFICE (SOUNDBITE) (Portuguese) EDUCATION ENTREPRENEUR, JANGUIE DINIZ, SAYING: "I think the economy is growing because of (better) education. But not only because of that, but also because there are qualified people coming from outside. If they (companies) were not bringing people from outside, then better quality education would be the only reason (for economic growth). But since there are not enough qualified people here and they are coming from the elsewhere, we can say that both things are responsible for that: the economy grows due the educational growth and education grows due to the economy." GENERAL VIEW OF COLLEGE CLASSROOM STUDENTS AT CLASSROOM WORKERS AT CONSTRUCTION SITE VARIOUS OF BUILDING UNDER CONSTRUCTION NATAL, BRAZIL (RECENT) (REUTERS) MODEL OF CONDOMINIUM AT INTERNATIONAL INVESTMENT CONFERENCE BUSINESSMEN AT CONFERENCE STARWOOD CAPITAL'S ACQUISITIONS ASSOCIATE, RYAN HAWLEY, AT CONFERENCE (SOUNDBITE) (English) STARWOOD CAPITAL'S ACQUISITIONS ASSOCIATE, RYAN HAWLEY, SAYING: "Everyone is well aware of the mass migration in the U.S. to the Sunbelt, to places like Las Vegas and Phoenix and Orlando and Atlanta. And I see some of that happening in Brazil. I see increasing opportunities in the northeast -- the GDP growth rate is higher here than it is in the more established south and that's very analogous to what happened between that kind of northeast of the U.S. and the Sunbelt. So, I would be very bullish on the northeast in the long run." CHILDREN PLAYING ON THE BEACH COUPLE WALKING ON THE BEACH TOP VIEW OF BEACH-FRONT NEIGHBORHOOD GENERAL VIEW OF PALM TREES AT SHORE GENERAL VIEW OF BEACH
- Embargoed: 9th July 2010 13:00
- Keywords:
- Location: Brazil
- Country: Brazil
- Topics: Economic News
- Reuters ID: LVA8RJNVX6EH9P7B6378B1VJCF3S
- Story Text: The dozens of luxury buildings which have been springing up along Recife's main beach front are a portrait of the transformation of Brazil's northeast -- once a welfare-dependent laggard and now the country's fastest-growing region.
Soaring sales of household appliances and an unprecedented expansion of credit also reflect the economic boom in the region, where millions have been pulled into a home- and car-owning middle class.
Heavy government and private investment, including from multinationals, is creating opportunities for people who previously might have joined an exodus to the big southern cities of Sao Paulo and Rio de Janeiro, where slums are crowded by northeasterners.
The government's "Bolsa Familia" stipend program that President Luiz Inacio Lula da Silva expanded at the start of his presidency in 2003 has also helped lift more than 20 million Brazilians out of poverty.
According to central bank figures, credit in the northeast is growing faster than anywhere in Brazil as financial institutions rush to meet burgeoning demand from a population that has long been frozen out of access to funds.
And the first thing many in the new consumer class want is a television or a refrigerator. This desire is fueling a fierce battle among local retailers and drawing in giants such as Wal-Mart. The U.S. group said last year it would invest $255 million dollars to raise its number of stores in the region by 30 to 168.
In a Recife mall retailer store, Eletroshopping, Luciana Regina Freitas, a 35-year-old health worker, proudly carted off her first ever computer for $565 dollars.
"I am entering Brazil's world of high technology," she said.
Eletroshopping has doubled its number of stores across the region in the past two years to 110 with sales of about $400 million dollars and says it expects to double or triple in size in the next few years.
Eletroshopping's vice president Fernando Freitas said economic growth in the region was helping all sectors.
"The growth in the northeast has had a cascading effect, generating jobs, income, consumption, and all these things helped a lot the northeast in the past two years," he said.
The proportion of northeasterners living below the poverty line fell to 31 percent in 2008 from 50 percent in 2003, a study by the Getulio Vargas Foundation, or FGV, in Rio de Janeiro found.
But this new wave of growth also owes much to market forces and entrepreneurial spirit.
Forty-six-year-old Janguie Diniz, the head of the region's biggest private education firm, is an example. His company has about 30,000 students and an annual turnover of $85 million dollars.
Diniz said he thinks the regions' economy was also pulled by a better-quality education.
"I think the economy is growing because of (better) education. But not only because of that, but also because there are qualified people coming from outside. If they (companies) were not bringing people from outside, then better quality education would be the only reason (for economic growth). But since there are not enough qualified people here and they are coming from the elsewhere, we can say that both things are responsible for that: the economy grows due the educational growth and education grows due to the economy," he said.
But many companies complain about a shortage of qualified labor to keep pace with today's strong growth rates.
Ryan Hawley, an acquisitions associate at U.S. private equity firm Starwood Capital, said he saw parallels between northeastern Brazil and the U.S. southern "Sunbelt" states, traditionally poor areas that boomed after the 1970s amid an influx of migrants and investment.
"Everyone is well aware of the mass migration in the U.S. to the Sunbelt, to places like Las Vegas and Phoenix and Orlando and Atlanta. And I see some of that happening in Brazil. I see increasing opportunities in the northeast -- the GDP growth rate is higher here than it is in the more established south and that's very analogous to what happened between that kind of northeast of the U.S. and the Sunbelt. So, I would be very bullish on the northeast in the long run," he said.
Hawley was looking at opportunities in logistics or retailing to invest some of around $700 million designated by Starwood this year for non-U.S. investments.
Still, the northeast's growth is outstripping the rest of the country largely because it has a lot of catching up to do. Poverty in the region, especially in its drought-prone interior, remains dire -- its 2008 poverty rate of 31 percent was still more than quadruple the rate in the wealthy south.
The region had Brazil's worst adult illiteracy rate of 24 percent in 2001, accounting for half of the 16 million Brazilians who cannot read or write although it has less than a third of the population, a government study showed. - Copyright Holder: REUTERS
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