Home  > Brazil - Overview
 Share  Print Version  Email

Other Translations

Brazil - Overview

Contents extracted from the comprehensive atlas of international trade by Export Entreprises

Introduction

Capital:: Brasilia
Area:: 8.515 km2
Total Population:: 198.656
Annual growth rate:: 1.00%
Density:: 23.00/km2
Urban population:: 85%
Population of Sao Paulo (19.890), Rio De Janeiro (14.387), Belo Horizonte (5.397), Recife (3.769), Porto Alegre (3.646), Fortaleza (3.415), Curitiba (3.261), Campinas (3.200), Salvador Da Bahia (3.173), Colombo (2.160), Brasilia (2.090)
Official language: Portuguese
Other languages spoken: English is the first foreign language spoken in Brazil. Spanish is generally understood by the Brazilians. French is still spoken by around 570,000 people across the country.
Business language: Portuguese, English and Spanish.
Ethnic Origins:: According to the 2010 Census, 47.7% of the Brazilian population were white, 43.1% of mixed ethnic origins, 7.6% black, and 1.6% belonged to other ethnic minorities (Indians, Arabs, Japanese).
Beliefs: Despite a very strong Catholic tradition, religious freedom has been recognized and practiced for several decades. Religions of African origin were legalized in the 1950s, and many Neo-Pentacostal churches have been opened since the end of the eighties.
Telephone codes:
To make a call from: 0
To make a call to: +55
Internet suffix:: .br
Type of State::
A federal republic based on parliamentary democracy. The Brazilian constitution gives extensive powers to the government.
Type of economy::
Upper-middle-income economy, Emerging Financial Market
7th world economy with high inequalities; leading producer of sugar and coffee in the world.

Economic overview

Brazil is the sixth largest global economy. Prudent fiscal and monetary policies along with the necessary micro-economic reforms allowed the Brazilian economy to withstand the global economic crisis. After having experienced strong growth, the Brazilian economy started showing signs of a slowdown due to the stagnation of prices of raw commodities in exports, a drop in domestic demand caused by the high level of household debts and a decline in investments. Growth was weak in 2012; however, it increased again in 2013 (2.5%) and inflation was 6%. The economic growth should keep this same pace in 2014.

President Dilma Rousseff is committed to pursue the same politics of Lula, her predecessor. However her interventionism policies hinders investors. The priority is given to relaunch the economy and to encourage foreign investment. The country's potential is hindered by a number of challenges: it has an expensive currency, transportation infrastructures are in decaying conditions and there is social and geographic inequalities. The Plan for accelerated growth includes, among other measures, an extensive program of credit support and financing of investments (about EUR 660 billion) as well as long-term fiscal measures. The government also wants to keep inflation under control and reduce its public debt which has attained more than 60% of GDP. However, the measures that support growth are being delayed and the government is not applying them fairly. Moreover, the country has to start structural reforms such as the modernization of its fiscal system. Salaries are taxed at 58% and the tax share to the GDP (36%) is the highest among the emerging countries. The same is happening with consuming taxes. Lastly, the pension retirement system is extremely high. In mid 2013, a huge protesting movement broke off criticizing the decay of the transportation infrastructures and public services, the poor condition of the education system, the high cost of living and the expenditures for the World's Cup 2014. Public investments are not sufficient to ensure a sustainable growth and private investments declined in 2013. The observers highlight the country's fragility in case of an external impact. In spite of these problems, Brazil counts with efficient multinationals, a performing food-processing industry sector, an important amount of foreign reserves (USD 376 billion) and powerful public bank for the development.

Despite the good economic performance, there are still significant social problems. The country's inequalities are among the highest in the world. There are large regional disparities and delinquency and criminal violence are on the rise. The unemployment rate (5.4%) is getting close to its historical minimum; however, informal employment remains high. Although the results are not equitable, during the last two years 22 million of persons are no longer in extreme poverty conditions.

Main industries

Brazil has abundant natural resources and its economy is relatively diversified.

As a major agricultural power, Brazil is the world's largest producer of coffee, sugar cane and oranges, as well as one of the largest producers of soy. The country also attracts many world groups in the food and bio-fuels industries. Brazil has the world's largest commercial livestock herd. Nevertheless, agriculture's contribution to the GDP is relatively small, accounting for only 5.5%, yet this sector ensures 40% of its exports. Forests cover half of the country, with the largest rain forest in the world situated in the Amazon Basin. Brazil is the world’s fourth largest exporter of timber.

Brazil is also a great industrial country. It benefits from its mineral ore wealth and it is the second world largest exporter of iron and one of the main producers of aluminum and coal. As an oil producer, Brazil is aiming to become self-sufficient in the near future (its reserves could make of Brazil one of the main five producers of oil). The country is asserting itself more and more in the textile, aeronautics, pharmacy, automobile, steel and chemical industry sectors. Most of the large automobile manufacturers have set up their production plants in the country. The industrial sector contributes to more than one-fourth of the GDP but it has experienced a strong slowdown; the government is trying to improve this situation through the "Brazil Maior" plan.

The tertiary sector represents two-thirds of the GDP and employs 60% of the active workforce. In the recent years, the country has embarked on the production of high added-value services, especially in the fields of aeronautics and telecommunications.

Foreign trade overview

Although foreign trade only represents one-fourth of its GDP, Brazil is amongst the 20 top world exporters and has an enormous economic potential. The country's main trade partners are China, the United States, the countries of the Mercosur and the EU. Brazil’s trade balance is structurally positive.

In 2011, the country recorded the highest trade surplus since 2007. However, it went down by 35% in 2012, a trend that continued in 2013 since its trade surplus was only USD 2.5 billion, a reduction of 87% in relation to 2012. This clear decline was due to the decrease in prices of raw materials, the increase in energy imports and less competitiveness in Brazilian products. However, it is important to note that the export of agricultural products broke the record in 2013, increasing by 4% from the previous year. The surplus (USD 83 billion) obtained from these exports compensated the trade deficit from the other sectors. According to the estimations, the agricultural sector has triplicated its results in relation to the year 2000.

FDI

After a slowdown in 2009, foreign direct investment (FDI) into Brazil has been booming. After having reached USD 65 billion in 2012, FDI inflows in Brazil increased to USD 64 billion in 2013, largely compensating for the deficit in the current accounts. Even though FDI influx is going through a slight decline since 2011, Brazil remains the largest recipient of FDI in Latin America and the fourth one in the world. Currently, the country is the fourth largest investor in emerging markets and the first in Latin America.

The attractiveness of Brazil for international investors is due to several factors:
- A domestic market of nearly 200 million inhabitants;
- A booming economy;
- Easy access to raw materials;
- A diversified economy, therefore less vulnerable to international crises;
- A strategic position allowing easy access to other South-American countries.

Among the factors hindering FDI are heavy and complicated tax systems, slow bureaucracy and cumbersome and rigid labor legislation. Brazil ranks 116 out of 189 countries in the classification of Doing Business 2014 issued by the World Bank.

The main investors in Brazil are the United States, Spain and Belgium. The sectors attracting most of the foreign investments are finance, the beverage industry, oil and gas and telecommunications.

Copyright © 2016 Export Entreprises SA, Inc. All Rights Reserved.
 Share  Print Version  Email
Comments &Ratings (0)
If you are a human, do not fill in this field.
Click stars to rate.
   Comments are truncated at 1000 characters