Source: Estadão - SP - ECONOMY - 10/09/2009

The good behavior of the banking sector in Brazil, in addition to luck with the new discoveries in the oil field, brings high hopes for Brazil, according to a report published on Thursday in the British daily Financial Times.

In a special section on “The New Great Ones”, to be presented to the World Economic Forum in Asia, the report states that Brazil “has been confusing skeptics who doubted its economic strength, with a recent demonstration of vigorous corporate life”.

According to the report, thanks to good economic policies, and a little luck with the price of commodity exports, the country, one of the last to enter a recession, will probably be one of the first to leave.

The newspaper points out that despite the discoveries of oil in the pre-salt layer dominate the headlines, "it is the financial sector that will act as a harbinger of a broad corporate recovery in Brazil".

The Brazilian banking sector has remained conservative in recent years, regulated by the Central Bank, and even when the recession hit, the government was able to approve measures to encourage banks to lend more.

"There are already signs of a return to form in the Brazilian credit markets, which had been growing at rates of 25% to 30% before the crisis," says the newspaper. "The return on credit will help to lubricate consumer spending and boost retail companies on the world stage."

"Companies like Natura cosmetics, and Hypermarcas, of food, cleaning products, hygiene and medications should accelerate expansion plans abroad."

According to FT, these companies will join the group of Brazilian multinationals, which already attract foreign investments, such as Vale, Petrobras and Gerdau.

"Brazil even challenges pessimists who see the labor market and bureaucracy as inflexible and with the potential to hamper recovery," says the report.

But, says the FT, despite the good news, the next few months will not be completely peaceful and some companies, more exposed to the economic crisis, will take longer to recover.

“Some sectors were hurt by overconfidence. The sugar and ethanol sector attracted a lot of investment and some companies were extremely leveraged. This has proved a terrible legacy in the downturn in the economy and some companies now face bankruptcy. But even in this sector, there are signs of improvement, with the price of sugar reaching the highest level in the last 30 years. ”

For the FT, another factor that can hinder financial recovery is the presidential elections, which should cause uncertainty in the market, despite the fact that the next president should not significantly change economic or industrial policies.

“In the past, the Brazilian economy and the corporate sector were affected by all global crises. This time Brazil is escaping relatively unscathed ”, says FT.

“This must have two positive effects. It must fundamentally change the perception of risk, making investment cheaper, while giving Brazilian companies a substantial advantage as the global recovery progresses ”, he concludes. BBC Brasil - All rights reserved. Reproduction without written permission from the BBC is prohibited.