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BBC MUNDO RADIO
Brazil goes to the polls today looking almost certain to elect a former Marxist guerrilla as the country's first-ever female president.
Dilma Rousseff, who spent three years in jail in the early 1970s for her part in a struggle to topple Brazil's then military dictatorship, is aiming to build on the legacy of the country's hugely popular socialist president Luiz Inacio Lula da Silva.
She is standing on a big government tax and spend platform that might be expected to send investors running for the hills.
On the contrary, Brazilian bonds have just notched up their eighth consecutive monthly gain as investors bet on a continuation of the remarkable growth story that many believe will make Brazil the world's fifth-biggest economy within 15 years.
The exuberance is not restricted to the government debt market, with the main Bovespa index of Brazilian stocks close to an all-time high after leaving developed markets for dead over the past 10 years.
Rousseff, a former energy minister, has big shoes to fill. Lula da Silva is in the unique position of enjoying an 80pc approval rating after eight years in power. He has presided over an extraordinary transformation of Latin America's biggest economy which is forecast to grow at around 7pc this year. Since his election in 2002, Brazil's inflation rate has tumbled from 17pc to under 5pc, the Brazilian real has more than doubled in value against the US dollar and two years ago the country was awarded its first investment-grade credit rating.
Unsurprising, therefore, that Rousseff should have promised more of the same, including an extension of the social welfare programmes that have pulled millions of Brazilians out of poverty. But therein lies one of a long list of challenges facing the incoming president. Sceptics say it is not clear where the money will come from to pay for all the things that desperately need fixing, from a woeful education system to creaking infrastructure and transport bottlenecks. Brazil's budget deficit has doubled to 3.4pc since the financial crisis.
The cost of raising money has already pushed real interest rates to some of the highest in the world. The base rate is 10.75pc and the futures market points to a 12.5pc borrowing cost by the end of next year. The fear is that the private investment needed to drive sustainable economic growth is being crowded out by the government's need for cash.
However, Brazil is blessed with many competitive advantages. Compared with its emerging market peers, Brazil is actually well diversified, with large and developed agricultural, mining, manufacturing and service sectors. With a population of almost 200m, the fifth-biggest in the world, it also has a strong labour pool.Exports have grown strongly in recent years and now include aircraft, electrical equipment, cars, biofuels, textiles, shoes, iron ore and agricultural commodities. And there's a strong domestic consumption story as well, with more than 30 million estimated to have joined the television- buying, fridge-using middle class in recent years.
Spending will continue to be underpinned by very favourable demographics, with two-thirds of the population between the ages of 15 and 64 and a median age of only 29 years. A young, increasingly affluent population, not yet saddled with the debts afflicting the West, is very much in the consumption sweet spot.
Another important driver of Brazil's growth in future years will be its emergence as an energy superpower. The discovery in 2007 of potentially enormous deposits of oil and gas off its coast have been estimated at between 80 and 100 billion barrels, which would put it among the world's top five producing countries.
Brazil is not without its challenges – it is still a relatively poor and unequal country, even by the standards of Latin America. But it has enough going for it to ensure that not even the election of a reformed Marxist firebrand will knock it off its destined path.
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