Bustling Shopping Malls in Brazil Are A Far Cry from the Consumer Gloom in Europe and the U.S.

The Brazilian stock market (Bovespa Index) has increased 20% since late October to 41,674, during a period when the U.S. stock market (S&P 500) has dropped by more than 10% (see chart above, click to enlarge). The Bovespa is trading on the futures market at 48,795 for October 2010 settlement, or 17% above its current level.

REUTERS -- An opinion poll this month showed a majority of Brazilians expect their economy to recover shortly, with around 51% betting employment and salaries will improve over the next six months, up from around 47% in December. Car sales in January grew for the second consecutive month indicating consumer confidence. Chocolate makers say they are producing a record number of Easter Eggs in anticipation of stellar demand this year, and bustling shopping malls in major cities are a far cry from the consumer gloom in Europe or the United States.

The country is less exposed to the global economy than many others. Trade makes up only 22% of GDP, compared to nearly twice that in Mexico. The liquidity crunch has also been less severe than elsewhere because consumer credit, while expanding rapidly in recent years, is still relatively unused. Unemployment is rising only gradually and banks are relatively solid -- two important psychological crutches.