RIO DE JANEIRO, BRAZIL – As Sun-Tzu said – “In the midst of chaos, there is also opportunity” – which is a silver lining but also a kick-in-the-pants for the chicken littles out there. Sure Brazil’s currency, the real, has dropped like the bath-water, exasperating inflation, while the economy (GDP predictions) continue to cool, but what are we going to do about it?
The conversations I’ve had with a lot of the expatriates in Rio over the last six months have all followed a similar tone. We’ve all been scratching our head (the one’s still here) thinking where is the revenue opportunity to correspond with the cost increases.
In the last three months, people are talking about the real estate flash-fire ending, and some predicting a bubble burst, and even with the relative lack of credit (mortgages) in Brazil, the shock waves on local commerce. The protests that engulfed Brazil in June were a hard slap in the face for ‘the country of tomorrow’ – a message that Brazil is not there yet.
More recently the Brazilian real has tumbled against the U.S. dollar and within a very short time increased some foreign purchasing power, while hamstringing the ability of locals to buy international, and causing a spike in the cost of anything imported (above the normal high inflation). On a macro level, Brazil’s marque industry giants are all in tuck-and-roll mode; Petrobras, Vale and EBX/Eike Batista.
Without sounding too gloomy, in Rio people are stuck in real estate deals, storefronts are closing, people are going home (the Oil guys have been streaming out of here all year), and in general locals are spending less on the street. So it has seemed.
Yet as the storm sets in and the hordes of speculators scatter, there will be opportunity in Rio. Opportunity for new business ventures, new customers, new approaches and strategies. The conversations lately have seemed to have turned the corner on the frustrating – and seemingly unending – cost of living hikes, to what is next?
There is a sense of optimism that real estate costs will go down to something reasonable soon, and that foreign investment will return given the exchange rate. In Rio we will have summer-high season soon, New Years to Carnival always brings back the ol’ faithful tourism and good times.
Obviously the World Cup and Olympics are still around the corner, but the trial mini-mega-events this year, the FIFA Confederations Cup and World Youth Day, have shown us that they are just blips on the radar. The only people that can build a business plan around the mega-events are FIFA and the Olympics themselves. That’s okay once everyone knows it.
The Rio Times is looking for new opportunities and ways to invest in Brazil, and some major changes are in the works that should be announced in the next month. As we face the future, we’re hoping that in the chaos that has been Rio’s economy over the last couple years, we’ll find a way to publish more and better news, and pay the rent.