Brazil's Northeast Emerging as Economic Powerhouse

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RECIFE, Brazil -- The world's money problems are putting some speed bumps in the growth of Brazil, South America's emerging economic superpower. But, Brazil's long-term economic outlook is still promising.

One reason is the country's fast-growing Northeast region. The area has historically struggled as one of the poorest in Brazil. Today, the economy is booming.

The locals say, "We used to be Brazil's burden, and now we're the solution."

Economic Powerhouse

"Brazil has become this global economic powerhouse and then we're talking about a region within Brazil that's growing even faster than the rest of the country," Usha Pitts, principal officer at the U.S. Consulate in Recife, said.  Recife is a coastal city of 1.5 million in the Northeastern state of Pernambuco.

In the last two years, Brazil's gross domestic product grew 7.5 and 2.7 percent respectively. That is compared with 9.3 and 4.5 percent in Pernambuco and 7.9 and 4.3 percent in Ceara, another northeastern state, according to the Brazilian Institute of Geography and Statistics.

The other driver of this boom is the more than 50 million people living in the region's nine states. The Northeast is Brazil's fastest growing population center.

Many credit former President Luiz Inacio Lula da Silva, himself a product of the Northeast, for leading the charge to insist the government invest here.

Today the payoff is a northeast migration as Brazilians from Rio de Janeiro and Sao Paulo find jobs here.

A Strategic Port

Much of that activity centers on the Port of Suape, one of the region's bright spots. Its strategic location and deep harbor attracts international attention and business as does the industrial complex surrounding it.

Brazil's largest oil refinery is there, as well as the hemisphere's largest shipyard and wheat mill.

In the last four years the Port of Suape has attracted 100 new companies that are bringing growth and jobs. Approximately 70,000 workers are employed in the port and complex around it and more are expected.

"The whole economy is growing around the complex and the state and federal government is working, the municipal government is too, to create the infrastructure," Dr. Andre Magalhaes, an economist at the Federal University of Pernambuco, explained.

The government's $2.5 billion investment in the port is showing a great return. Driving along a new toll road from Recife to Suape, there are million-dollar coastal homes springing up right alongside the road.

National and international investment are behind plans for a new railway linking interior Brazil to the coast.

Educating the Public

The port is also aggressively pushing outside companies to consider the region as a whole.

"We don't want to have all the companies in Suape," Silvio Leimig, Suape global director said. "We need to share this development."

The U.S. Consulate in Recife said many American businesses haven't caught on to Brazil's changing regional dynamics, although interest is beginning to grow as corporations search for new markets in this tough economy.

"More and more you're seeing small and medium-sized companies get interested in opportunities here in the region, whereas down South in Sao Paulo everyone knows there's lots of action there but the markets are also more saturated," Pitts explained. "Up here in the Northeast there are abundant opportunities."

Questions still abound about Brazil's economic future, however. Top trading partner China is now struggling, which raises doubts about further investment in Brazil and other top Latin American economies.

"For those countries to continue to look for China to be a major investor in extracting resources, minerals, etc., they should not depend on that for all their growth," Jim Roberts, a research fellow at the Heritage Foundation, said. "They need to go reform the bases of their own private economy."

Brazilians know that means making their education system a priority.

"If you take any international assessment of education, Brazil always comes in last place," Dr. Marcelo Silva, an economist at the Federal University of Pernambuco, said.

U.S. ministries like Compassion International are helping to fill the gap with child sponsorship programs that emphasize academics.

But in the long-term, Brazil will need a strong public school system and highly skilled work force if it hopes to compete with other world powers.

New Found Wealth

The issue of poverty still exists but many believe it's slowly getting better.

For right now, a growing number of Brazilians here in the Northeast are enjoying the region's new-found wealth.

It's why you'll find upscale boutiques across the city and fine hotels lining Recife's beautiful beaches.

It's an economic boom that the people here hope will stay.

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Heather Sells

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