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Brazil readies for commercial carnivalIs South America's giant waking up to its economic potential?
 As carnival time approaches, many in Brazil are expecting economic success. BUSINESS TRAVELLER
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YOUR E-MAIL ALERTSRIO DE JANEIRO, Brazil (CNN) -- Ahead of carnival time, Brazil is abuzz with an optimism that is also reflected in the country's buoyant economy, but can the world's sixth most populous country fulfill its potential as a safe destination for global investment? While Rio de Janeiro's notorious favela slum districts are a reminder of the Portuguese-speaking nation's problems, its glistering tower blocks and new designer malls are proof that for some at least, Brazil has great potential. Much of its recent success is credited to President Luiz Inacio Lula da Silva, better known as "Lula". A former shoeshine boy and metalworker, Lula powered into the presidency in 2003 and quickly turned around a hyperinflation-dogged economy on the brink of meltdown. While interest rates remain high at more than 17 percent, the currency, the real, has appreciated by about 30 percent. Export sales have doubled to nearly 120 billion dollars and the country's key Bovespa stock index last year alone gained one third of its value. Furthermore, Brazil has repaid its loans in full to the International Monetary Fund two years before they were due. But scandal is rocking the boat in Brazil. The governing Workers Party faces allegations of corruption and bribery, and in an election year, this could prove to be politically fatal. Says Gilberto Gil, a Brazilian musician recruited by Lula as the country's culture minister, the controversy has harmed the president. "Not to a point that you could say he's dead. Focusing on the next elections, now he's recovering. Last polls indicate that his popularity is back in good shape," he told CNN. While Lula may have brought economic stability, there are other elements to Brazil's success: notably the passionate drive that has fueled its success on the soccer pitch and innovations that have enabled self-sufficiency. Soccer successThese include the development of an ethanol fuel alternative available at gas stations. The country has been using ethanol made from sugar cane for three decades, but soaring oil prices mean that the rest of the world is now taking a keen interest. Appropriately as the football World Cup approaches, some believe that sport is fundamental to the country's economic future, "Football is important to the development of the country as a whole because when football is doing good... all the Brazilian teams, the big fan clubs are doing good," says Artur Antunes Coimbra, otherwise known as Brazilian soccer legend Zico. "People are happier and when people go to work and they're happy, they develop and produce much more," he told CNN. But hidden and secured from the same masses who enjoy the beautiful game are shopping centers that remain the reserve of the rich. Rio de Janeiro's Dazlu boutique complex is as opulent as it is vilified. Here people come for a taste of the good life, with everything from prized Petrus wine to helicopters and boats on offer. But Brazil is preparing for is an economic boom. New emerging market funds called BRICs -- an acronym encompassing Brazil, Russia, India and China -- expect these countries to be the four main economic superpowers of the future, even more important, according to some, than the G-7 group of nations. "I'm very optimistic that it will actually become really one of the best investment cases in the next 10 to 15 years," says Michael Konstantinov, a BRIC funds manager with Allianz Global Investors. "If you take China and India, those are the two most populous states in the world, almost 35, 40 percent of the world's population is concentrated there. They are developing fast and they are basically short in commodities," he told CNN. "Russia and Brazil are the two largest countries which are exactly offering these kind of products for China, for India." Cautious optimismOne of the main targets for international firms is Brazil's agricultural sector, which accounts for 40 percent of the country's GDP. Natural resources, namely the oil reserves that have helped Brazil's Petrobas become one of the world's top ten oil companies, have also helped fuel its economic improvement. But even with all Brazil's natural wealth, there are many skeptics. Norman Gall, an American who has lived in Brazil for almost 30 years, believes the country still has a long way to go. "I'm cautiously optimistic. Brazil has enormous problems, but they have enormous resources. The Brazilians are very conscious of their enormous resources, they are not terribly conscious of how to deal with their institutional problems like infrastructure and education, all of which impact the country's growth." Adds Professor Eduardo Gianetti of the University of Sao Paulo, Brazil may be in danger of missing the boat. "We have had low growth, moderate growth for a long, long time, and we should be growing much more. Other emerging markets are growing at a much faster rate than Brazil. So Brazil is losing ground in terms of growth," he said. CNN's Shantelle Stein and Richard Quest contributed to this report. 
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