Brazilian carnival is forever

Brazilian carnival is a  great festival held forty-six days before Easter. Its  origins are debated intensively. Some say history of carnavals lasts  10.000 years before Christ, when people  wearing masks, and having their bodies painted and dolled up, performed ritual dances celebrating spring, new life… whatever…  Others recall Egyptian  Goddess Hertsa,  Roman/Greek Saturnalias and Lupercalias. Anyway ancient traditions were incorporated into Brazilian climate, mentality, lifestyle, blood. You name it. And now when you say carnival, you imagine Brazil, land of your dreams, even if your still believe, Austria is miss spelled Australia. Or vice verse.

Brazil carnival

Of course, carnival isn amazing, but if you are going to become investor into Brazilian economy, think about it as a “cash cow” (recall BCG model 🙂 ) For example, have a short walk on Rio street s and   find dozens of Carnival costumes ateliers, supplying more than 200 samba-schools from all over the country.  Try to create typical inventory list for  Carnival costume manufacturer and include there cloths,  polyester, feathers, beads,Amherst pheasant tails feathers (cost up to US$ 72.00),  Svarowski crystals, etc. This is a huge industry, isn’t it ?

You may ask: “what is the point to talk about prospects of carnaval industry ?” Neither investor would regard temporary (alhtough regular) event as an attractive option to spend money.  Despite the fact you cam see incredibly fantastic Carnival parades in Helsinki, Notting Hill, Frankfurt, Asakusa, San Luis, Paris, Copenhagen, and innumerous other cities, using the “Made in Brazil Carnival” model. Yet, people do not make plastic surgery operations, do not buy luxury cars, and do not participate in carnavals in crisis. And we know crisis  is here; and for a long time…
And all Carnivals have  a common feature: as all good things must come to an end so  in early March most of Brazilian towns return to  sleepy self.

Brazil carnival dancer

The answer is simple: I wanted to compare  happy, energetic and creative Brazilian Carnival to Brazilian economy. Some people regard it as a huge bubble, which explode as interest rates go up and real estate market drops down. It’s a really possible event, especially considering deadborn model of modern world economic: “consumption of non-renewable resources”. Just think about it:  everything in modern economy has the only ultimate goal: “kill natural resources”. Beginning from financial system, serving to pay for everything produced, from  flat screen TVs, cell phones, fridges to cars and chips. For example number of credit cards issued between 2004 and 2011 grew 132%, to nourish Brazilian market, one of the few growth markets in the world financial crisis. Real estate prices have tripled since 2001, representing one of the most dynamic property increases, refer to statistic of  Central Bank.

MM/YY / Total Residences / Total Loans / Average residence value
June/12 – 408,522 – R$ 69,780,000,000.00 – R$ 170,810.00
June/11 – 452,761 – R$ 66,320,000,000.00 – R$ 146,484.00
June/10 – 353,313 – R$ 43,380,000,000.00 – R$ 119,939.00
June/09 – 289,351 – R$ 29,830,000,000.00 – R$ 103,092.00
June/08 – 240,418 – R$ 23,397,000,000.00 – R$ 97,322.00
June/07 – 140,820 – R$ 11,770,000,000.00 – R$ 83,588.00
June/06 – 85,212 – R$ 6,680,000,000.00 – R$ 78,392.00
June/05 – 50,760 – R$ 3,637,000,000.00 – R$ 71,650.00
June/04 – 48,434 – R$ 2,615,000,000.00 – R$ 53,990.00
June/03 – 31,220 – R$ 1,792,000,000.00 – R$ 57,399.00
June/02 – 29,897 – R$ 1.731.000,000,00 – R$ 57,898.00
June/01 – 38,977 – R$ 1,955,000,000.00 – R$ 50,157.00

Yet, I am optimistic about Brazil; first of all, from consumer point of view. This is a big country with abudant (at least abudant enough for our generation) natural resources, especially for agriculture.  Brazil   has  launched various projects to increase competitiveness, including the world biggest  one in infrastructure to reduce bottlenecks. Brazil has also reduced taxes (today it announced electricity bills will be cut by 16% in 2013), lowered interest rates and cut Federal VAT (IPI) on cars.

It almost impossible to compete in the modern world. Cost of labor is not, money, technology, natural resources, each factor alone, is not enough. Possibly (and hopefully) Brazil is a happy exlusion in this “can not compete list” and in future we can say: Brazilan economic is a healthy Carnival in world economy, the Carnival forever.