BRAZIL ECONOMY FORECAST October 2009

According to the latest Brazil economy forecast issued by the International Monetary Fund (IMF) in October 2009, the Brazilian real Gross Domestic Product (GDP) will shrink in 2009 at an average rate of less than 1%, but rebound in 2010 registering a growth rate in excess of 3%.

More specifically, the October IMF forecast predicts that Brazil real GDP, after having grown in 2007 and 2008 by 5.7% and 5.1%, respectively, will decrease in 2009 at an average rate of 0.7%.

In 2010 though, the Brazil economy is expected to return to expansion mode, registering a real GDP growth rate of 3.5%. Real GDP is expected to continue growing at this rate until 2012. The graph below portrays historical and forecast growth rates for the Brazil economy.

Brazil Economy Forecast October 2009

Source: IMF

IMF's Brazil economy forecast anticipates that inflation, which in 2008 averaged 5.7%, will be decreasing in 2009 and 2010 to 4.8% and 4.1%, respectively. As the graph below indicates, the inflation rate will then rise to 4.5% in 2011 and stabilize at that level throughout 2013.

Brazil Inflation Forecast October 2009

Source: IMF

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Internal Rate of Return(IRR)
The 3 Formulas for Modified IRR (MIRR)/Financial Management Rate of Return (FMRR)
Potential Gross Income Multiplier (PGIM)
Potential Gross Income
Effective Gross Income Multiplier
Effective Gross Income
Net Income Multiplier
Net Operating Income
Overall Capitalization Rate/Income Return
Capitalization Factor
Band-of-Investment Formula for Estimating a Market/Required Capitalization Rate
Theoretical-Approach Formula for Estimating a Market/Required Capitalization Rate
Appreciation Return
Total Return
Return on Total Capital (ROR)
Return on Equity (ROE)/Cash-on-Cash Return/Equity Dividend Rate
Before Tax Equity Cash Flow (BTECF)
Equity Investment
Loan Amount
Debt Service
Mortgage Constant
Payback Period
Breakeven Occupancy
After Tax Cash Flow (ATCF)
Taxable Income
One-Period IRR
Income Tax Payment in Association with Income Producing Property
Capital Gains
Formula for Cash Flow for Last Period of Analysis
Future Resale Price
Annual Rental Income of Occupied Multi-Tenant Property
Multi-Period Lease Rate Growth Formula with Intertemporally Variable CPI Forecast
Multi-period Lease Rate Growth Formula with Constant CPI Forecast
Present Value (PV)
Net Present Value (NPV)
Profitability Index

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