After years of being called the country of the future, Brazil appears to be en route to becoming a major player on the global stage. In spite of its abundant natural resources and its sizeable domestic market, Brazil’s potential had always remained a promise. Boom and bust economics as well as hyperinflation have often slowed the Latin American country’s progress in the past.

Now economic stability has returned and the country is attracting investment from the world over. Brazil’s newfound economic prowess has been based on expanding production of its major commodities such as iron ore, oil, soy and sugar over the last few years, which has provided the country with a strong trade balance and stabilized its current accounts. This, in turn, has given successive governments the foundation to stamp out inflation, which was the bugbear of Brazilians in the 1980s and 1990s, and to impose greater discipline on fiscal spending.

As a result, foreign investors, looking for alternative high-yield investments outside the U.S. and Europe, have flocked into Brazil. And that wave of investment may only intensify as economists are expecting Brazilian sovereign debt to receive investment grade in 2008, which will allow a whole new group of institutional investors to come in.

Meanwhile, increased stability has allowed the central bank to reduce interest rates from the astronomical level of 45 percent per year seen in 1999 to the current level of 11.25 percent.
This decline in interest rates has unleashed pent-up demand and kickstarted the world’s tenth largest economy once again.

Car sales are at record levels, while the housing market is exploding and retailers are in rude health, all because of the explosion of consumer credit following the fall in interest rates.

Brazil’s government expects gross domestic product to grow 4.7 percent this year and recently Finance Minister Guido Mantega said the country could register growth above 5 percent over for the next three or four years.

Foreign funds are flowing into a wide spectrum of sectors, including sugarcane-based ethanol production for use as an alternative fuel, and infrastructure.

They are also supporting the wave of initial public offerings on the Sao Paulo Stock Exchange, or Bovespa, as medium-sized companies such as construction firm Gafisa, shippers Wilson,Sons and even the BM&F commodities and futures exchange seek to take advantage of the positive outlook to raise funds for expansion. This expansion is likely to continue as China leads demand for Brazil’s core commodities.

Brazil is already a key global supplier of iron ore and it could also become a major oil exporter, if it manages to exploit the massive offshore reserves whose discovery was recently announced by state-oil company Petrobras. In addition, it is one of the world’s leading food exporters and it is likely to become ever more important in this area as it is one of the few countries that still has abundant untilled arable land.

Years of mediocre growth had led some economists to question whether Brazil really deserved to be classed along with Russia, India and China as one of the BRIC nations. But Brazil appears to be coming of age and doubters are fewer and fewer.