Brazil’s Stimulus Package


August 20, 2012

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Lindo maravilhoso!

Well, yes, quite. For while us up-tight Brits aren’t known for our gushing enthusiasm, for South America, and for Brazil in particular, it’s a different story – especially when there’s much to celebrate.

In 2014 Brazil plays host to the World Cup, with the international jamboree that is the Olympics following just two short years later.

Both sporting spectacles require some serious infrastructure and investment and both are expected to provide the country with an economic shot in the arm that will help spur future growth.

And in good time too. After all, with Brazil’s economy having slowed to a crawl over previous years, the country that was once poster child to all emerging economies has found itself increasingly hampered by inadequate infrastructure (predominantly when it comes to roads, rails and ports) and a substantial shortage of skilled workers.

It was because of this that this week’s $66bn stimulus package – the first of many anticipated in the second half of 2012 – provided a welcome national respite and demonstrated another positive step to put Brazil back on the path to growth.

For clean energy, it also spells good news. For Brazil has long been recognised as one of the hottest tickets for wind power, with the country expected to add almost 1.5GW in 2012 alone – before repeating the trick again in 2013. This, set against a meagre few hundred MW all the way back in 2010 demonstrates much potential. Provided they can get the basics right.

As the challenges in the ports and with its container-shipping network demonstrate, delays are common, costs are high and the infrastructure needed to handle and transport large, heavy duty kit around the country is problematic at best.

Combine this with the challenge of actually hooking the farms up to the grid, with overcoming import tax issues and with an economy that has only recently started to encourage overseas business to invest and you’ve got no small task.

Nevertheless, it’s a task that remains wholly achievable. And as some of the bigger players in the market have demonstrated, the margins can present a compelling case. (Just don’t mention the ongoing Sinovel/Desenvix debacle.).

Whatever the case, with manufacturers already showing the way, it is no surprise to see the supply chain start to follow.

However, how much success the supply chain has is entirely dependent on its long-term commitment to the market, its integration into the local economy and in its ability to listen to the specific wants and desires of its local customer base.

Many support services firms show healthy optimism when faced with entering new markets – believing that many problems can be fixed along the way.

That may well be true, but while the Brazilians may say, “…fique tranquilo…” others may not have the ability to simply relax and forget about it.

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