Economy of Brazil
|Economy of Brazil|
The Itaim Bibi Financial District, São Paulo, Brazil
|Rank||7th (nominal) / 7th (PPP)|
|Currency||Brazilian real (BRL, R$)|
|Fiscal year||Calendar year|
|Trade organisations||Unasul, WTO, Mercosur, G-20 and others|
|GDP||$2.533 trillion (2013 est.) (nominal)
$2.309 trillion (PPP)
|GDP growth||2.3% (2013 est.)|
|GDP per capita||74th)|
|GDP by sector||agriculture: 5.5%, industry: 27.5%, services: 67% (2011 est.)|
below poverty line
|Gini coefficient||49.3 (June 2009)|
|Labour force||107.1 million (2012 est.)|
|agriculture: 20%, industry: 14% and services: 66% (2003 est.)|
|Unemployment||4.6% (December 2012) (with considerable underemployment)|
|Main industries||textiles, shoes, chemicals, cement, lumber, iron ore, tin, steel, aircraft, motor vehicles and parts, other machinery and equipment|
|Ease of doing business rank||130th (2013)|
|Exports||$256 billion (2012 est.)|
|Export goods||transport equipment, iron ore, soybeans, footwear, coffee, autos|
|Main export partners|| China 17.0%
United States 11.1%
Netherlands 6.2% (2012 est.)
|Imports||$238.8 billion (2012 est.)|
|Import goods||machinery, electrical and transport equipment, chemical products, oil, automotive parts, electronics|
|Main import partners|| China 15.4%
United States 14.7%
South Korea 4.1% (2012 est.)
|Gross external debt||$397.5 billion (31 December 2011 est.)|
|Public debt||54.9% of GDP (2012 est.)|
|Revenues||$911.4 billion (2012 est.)|
|Expenses||$846.6 billion (2012 est.)|
|Foreign reserves||$377.5 billion (November 2012)|
Brazil has the seventh largest economy by nominal GDP in the world, and seventh largest by purchasing power parity. The Brazilian economy is characterized by moderately free markets and an inward-oriented economy.
Brazil’s economy is the largest of the Latin American nations and the second largest in the western hemisphere. Brazil is one of the fastest-growing major economies in the world with an average annual GDP growth rate of over 5 percent. In future decades, Brazil is expected to become one of the five largest economies in the world.
According to the World Economic Forum, Brazil was the top country in upward evolution of competitiveness in 2009, gaining eight positions among other countries, overcoming Russia for the first time, and partially closing the competitiveness gap with India and China among the BRIC economies. Important steps taken since the 1990s toward fiscal sustainability, as well as measures taken to liberalize and open the economy, have significantly boosted the country’s competitiveness fundamentals, providing a better environment for private-sector development.
In 2012 Forbes ranked Brazil as having the 5th largest number of billionaires in the world, a number much larger than what is found in other Latin American countries, and even ahead of United Kingdom and Japan. Brazil is a member of diverse economic organizations, such as Mercosur, Unasul, G8+5, G20, WTO, and the Cairns Group.
- 1 History
- 2 Components
- 3 Economic status
- 4 GDP nominal
- 5 Income
- 6 See also
- 7 References
- 8 External links
- 9 Further reading
When the Portuguese explorers arrived in the 15th century, the native tribes of current-day Brazil, totaling about 2.5 million people, had lived virtually unchanged since the Stone Age. From Portugal's colonization of Brazil (1500-1822) until the late 1930s, the market elements of the Brazilian economy relied on the production of primary products for exports. Within the Portuguese Empire, Brazil was a colony subjected to an imperial mercantile policy, which had three main large-scale economic production cycles - sugar, gold and, from the early 19th century on, coffee. The economy of Brazil was heavily dependent on African enslaved labour until the late 19th century (about 3 million imported African enslaved individuals in total). In that period Brazil was also the colony with the largest amount of European settlers (most of them being ethnic Portuguese, but also Dutch (see Dutch Brazil) and some Azoreans, Madeirans, Spaniards, English, French, Germans, Flemish, Danish, Scottish refugees and sephardic Jews). Since then, Brazil experienced a period of strong economic and demographic growth accompanied by mass immigration from Europe (mainly from Portugal, Italy, the Azores, Spain, Germany, Poland, Ukraine, Switzerland, Madeira, Austria and Russia. But also from the Netherlands, France, Finland, Iceland and the Scandinavian countries, Lithuania, Belgium, Bulgaria, Hungary, Greece, Latvia, England, Ireland, Scotland, Croatia, Czech Republic, Malta, Macedonia and Luxembourg), the Middle East (mainly from Lebanon, Syria and Armenia), Japan, smaller amounts from the United States and some Afrikaners from South Africa) until the 1930s. In the New World, the United States, Argentina, Brazil, Canada, Australia, Uruguay, New Zealand, Chile, Mexico, Cuba, Venezuela, Paraguay, Puerto Rico and Peru (in descending order) were the countries that received most immigrants. In Brazil's case, statistics show that 4.5 million people emigrated to the country between 1882 and 1934.
Currently, with a population of over 190 million and abundant natural resources, Brazil is one of the ten largest markets in the world, producing tens of millions of tons of steel, 26 million tons of cement, 3.5 million television sets, and 3 million refrigerators. In addition, about 70 million cubic meters of petroleum were being processed annually into fuels, lubricants, propane gas, and a wide range of hundred petrochemicals. Furthermore, Brazil has at least 161,500 kilometers of paved roads and more than 93 Gigawatts of installed electric power capacity.
Its real per capita GDP has surpassed US$ 10,500 in 2008, due to the strong and continued appreciation of the real for the first time this decade. Its industrial sector accounts for three fifths of the Latin American economy's industrial production. The country’s scientific and technological development is argued to be attractive to foreign direct investment, which has averaged US$ 30 billion per year the last years, compared to only US$ 2 billion per year last decade, thus showing a remarkable growth. The agricultural sector, locally called the agronegócio (agrobusiness), has also been remarkably dynamic: for two decades this sector has kept Brazil amongst the most highly productive countries in areas related to the rural sector. The agricultural sector and the mining sector also supported trade surpluses which allowed for massive currency gains (rebound) and external debt paydown. Due to downturn in Western economies Brazil found itself in 2010 trying to halt the appreciation of the real.
The service sector is the largest component of GDP at 67.0 percent, followed by the industrial sector at 27.5 percent. Agriculture represents 5.5 percent of GDP (2011). Brazilian labor force is estimated at 100.77 million of which 10 percent is occupied in agriculture, 19 percent in the industry sector and 71 percent in the service sector.
Agriculture and food production
|Combine harvester on a plantation|
|Main products||Coffee, soybeans, wheat, rice, corn, sugarcane, cocoa, citrus, beef|
|Agriculture growth rate||9.2% (2008)|
|Labor force||15% of total labor force|
|GDP of sector||3.5% of total GDP|
In the space of fifty five years (1950 to 2005), the population of Brazil grew from 51 million to approximately 187 million inhabitants, an increase of over 2 percent per year. In order to meet this demand, it was necessary to take the development of cattle and crop raising activities a step further. Since then, an authentic green revolution has taken place, allowing the country to create and expand a complex agribusiness sector. However, some of this is at the expense of the environment, including the Amazon.
The importance given to the rural producer takes place in the shape of the agricultural and cattle-raising plan and through another specific program geared towards family agriculture (Pronaf), which guarantee financing for equipment and cultivation and encourage the use of new technology, as shown by the use of agricultural land zoning. With regards to family agriculture, over 800 thousand rural inhabitants are assisted by credit, research and extension programs. The special line of credit for women and young farmers is an innovation worth mentioning, providing an incentive towards the entrepreneurial spirit.
With The Land Reform Program, on the other hand, the country's objective is to provide suitable living and working conditions for over one million families who live in areas allotted by the State, an initiative capable of generating two million jobs. Through partnerships, public policies and international partnerships, the government is working towards the guarantee of an infrastructure for the settlements, following the examples of schools and health outlets. The idea is that access to land represents just the first step towards the implementation of a quality land reform program.
Over 600,000 km² of land are divided into approximately five thousand areas of rural property; an agricultural area currently with three borders: the Central-western region (savanna), the Northern region (area of transition) and parts of the Northeastern region (semi-arid). At the forefront of grain crops, which produce over 110 million tonnes/year, is the soybean, yielding 50 million tonnes.
In the bovine cattle-raising sector, the "green ox," which is raised in pastures, on a diet of hay and mineral salts, conquered markets in Asia, Europe and the Americas, particularly after the "mad cow disease" scare period. Brazil has the largest cattle herd in the world, with 198 million heads, responsible for exports surpassing the mark of US$ 1 billion/year.
A pioneer and leader in the manufacture of short-fiber timber cellulose, Brazil has also achieved positive results within the packaging sector, in which it is the fifth largest world producer. In the foreign markets, it answers for 25 percent of global exports of raw cane and refined sugar; it is the world leader in soybean exports and is responsible for 80 percent of the planet's orange juice, and since 2003, has had the highest sales figures for beef and chicken, among the countries that deal in this sector.
|Embraer RJ 145 jet manufactured by Embraer|
|Main industries||Automobile industry, petrochemicals, machinery, electronics, cement and construction, aircraft, textiles, food and beverages, mining, consumer durables, tourism|
|Industrial growth rate||8.8% (2008 est.)|
|Labor force||21% of total labor force|
|GDP of sector||29.7% of total GDP|
Brazil has the second biggest industrial sector in the Americas. Accounting for 28.5 percent of GDP, Brazil's diverse industries range from automobiles, steel and petrochemicals to computers, aircraft, and consumer durables. With increased economic stability provided by the Plano Real, Brazilian and multinational businesses have invested heavily in new equipment and technology, a large proportion of which has been purchased from U.S. firms.
Brazil has a diverse and sophisticated services industry as well. During the early 1990s, the banking sector accounted for as much as 16 percent of the GDP. Although undergoing a major overhaul, Brazil's financial services industry provides local businesses with a wide range of products and is attracting numerous new entrants, including U.S. financial firms. On May 8, 2008, the São Paulo Stock Exchange (Bovespa) and the São Paulo-based Brazilian Mercantile and Futures Exchange (BM&F) merged, creating BM&FBOVESPA, one of the largest stock exchanges in the world. Also, the previously monopolistic reinsurance sector is being opened up to third party companies.
Proven mineral resources are extensive. Large iron and manganese reserves are important sources of industrial raw materials and export earnings. Deposits of nickel, tin, chromite, uranium, bauxite, beryllium, copper, lead, tungsten, zinc, gold, and other minerals are exploited. High-quality cooking-grade coal required in the steel industry is in short supply.
|4||Petrobras||Oil & Gas Operations||138.80||21.26||313.25||238.80||Rio de Janeiro|
|20||Vale||Mining||46.54||18.12||132.86||184.96||Rio de Janeiro|
|51||Itaú Unibanco||Banking||71.47||8.37||507.84||115.08||São Paulo|
|80||Banco Bradesco||Banking||52.43||6.37||445.19||74.32||Osasco, SP|
|101||Banco do Brasil||Banking||48.97||7.00||546.91||54.89||Brasilia|
|203||OGX||Oil & Gas Operations||14.54||5.51||6.74||39.23||Rio de Janeiro|
|342||CSN||Steel & Cement||9.34||1.94||16.88||30.47||Rio de Janeiro|
|398||Gerdau||Iron & Steel||23.40||1.49||27.66||23.18||Porto Alegre|
|487||Eletrobras||Utilities||16.40||1.32||78.45||21.22||Rio de Janeiro|
|547||Usiminas||Mining & Siderurgy||7.95||1.02||18.95||19.33||Belo Horizonte|
|640||Embraer||Aerospace & Defense||6.14||1.03||15.69||17.56||São José dos Campos, SP|
The Brazilian government has undertaken an ambitious program to reduce dependence on imported petroleum. Imports previously accounted for more than 70% of the country's oil needs but Brazil became self-sufficient in oil in 2006-2007. Brazil is one of the world's leading producers of hydroelectric power, with a current capacity of about 260,000 megawatts. Existing hydroelectric power provides 90 percent of the nation's electricity. Two large hydroelectric projects, the 19,900 megawatt Itaipu Dam on the Paraná River (the world's largest dam) and the Tucurui Dam in Pará in northern Brazil, are in operation. Brazil's first commercial nuclear reactor, Angra I, located near Rio de Janeiro, has been in operation for more than 10 years. Angra II was completed in 2002 and is in operation too. An Angra III has its planned inauguration scheduled for 2014. The three reactors would have combined capacity of 9,000 megawatts when completed. The government also plans to build 19 more nuclear plants by the year 2020.
|Average GDP growth rate 1950-2013|
After the arrival of the Portuguese explorers in 1500, it was only in 1808 that Brazil obtained a permit from the Portuguese colonial government to set up its first factories and manufacturers. In the 21st century, Brazil reached the status of 8th largest economy in the world. Originally, the export list was basic raw and primary goods, such as sugar, rubber and gold. Today, 84 percent of exports consists of manufactured and semi-manufactured products.
The period of great economic transformation and growth occurred between 1875 and 1975.
In the last decade, domestic production increased by 32.3 percent and agribusiness (agriculture and cattle-raising), which grew by 47 percent or 3.6 percent per year, was the most dynamic sector – even after having weathered international crises that demanded constant adjustments to the Brazilian economy. The Brazilian government also launched a program for economic development acceleration called Programa de Aceleração do Crescimento, aiming to spur growth.
Control and reform
Among measures recently adopted in order to balance the economy, Brazil carried out reforms to its Social security (state and retirement pensions) and Tax systems. These changes brought with them a noteworthy addition: a Law of Fiscal Responsibility which controls public expenditure by the Executive Branches at federal, state and municipal levels. At the same time, investments were made towards administration efficiency and policies were created to encourage exports, industry and trade, thus creating "windows of opportunity" for local and international investors and producers.
With these alterations in place, Brazil has reduced its vulnerability: it doesn't import the oil it consumes; it has halved its domestic debt through exchange rate-linked certificates and has seen exports grow, on average, by 20% a year. The exchange rate does not put pressure on the industrial sector or inflation (at 4% a year), and does away with the possibility of a liquidity crisis. As a result, the country, after 12 years, has achieved a positive balance in the accounts which measure exports/imports, plus interest payments, services and overseas payment. Thus, respected economists say that the country won't be deeply affected by the current world economic crisis.
Support for the productive sector has been simplified at all levels; active and independent, Congress and the Judiciary Branch carry out the evaluation of rules and regulations. Among the main measures taken to stimulate the economy are the reduction of up to 30 percent on Manufactured Products Tax (IPI), and the investment of $8 billion on road cargo transportation fleets, thus improving distribution logistics. Further resources guarantee the propagation of business and information telecenters.
The Policy for Industry, Technology and Foreign Trade, at the forefront of this sector, for its part, invests $19.5 billion in specific sectors, following the example of the software and semiconductor, pharmaceutical and medicine product, and capital goods sectors.
Mergers & acquisitions
Between 1993 and 2010, 7.012 mergers & acquisitions with a total known value of $707 billion USD with the involvement of Brazilian firms have been announced. The year 2010 was a new record in terms of value with $115 billion of transactions. The largest transaction with involvement of Brazilian companies has been: Cia Vale do Rio Doce acquired Inco in a tender offer valued at $18.9 billions.
According to a search of Global Entrepreneurship Monitor in 2011 Brazil had 27 million adults aged between 18 and 64 either starting or owning a business. It means that more than one in four Brazilian adults were entrepreneurs. In comparison to other 54 countries studied, Brazil stood out as the third-highest one in absolute number. Another interesting fact found by Ipea, a government agency, is that 37 million jobs in Brazil were associated to business with up to 10 employees.
The most recent research of Global Entrepreneurship Monitor revealed this year (2013) that 50.4% of the Brazilian initial entrepreneurs are men, 33.8% are in the 35-44 age group, 36.9% did highschool and 47.9% earn 3-6 Brazilian minimum wages. These are the highest percentage of data that contradict with the data lower, 49.6% of initial entrepreneurs Brazilian female, only 7% of 55–64 years, 1% with postgraduate incomplete and 1.7% entrepreneurs who earn more than 9 times the minimum wage in Brazil.
|Rank||Country/Region||2012 GDP (Millions of $US)|
|Rank||Country/Region||2020 GDP (Millions of $US)|
|Career||Overall Median (BRL)||Start Median (BRL)||Top Median (BRL)|
|Systems analyst||Computer science||38,400||30,000||180,000|
- "Brazil". International Monetary Fund. Retrieved 2012-10-14.
- Brazil's economy grew 2.3% in 2013 Agência Brasil. Retrieved on 2014-03-30..
- Brazil - World Development Indicators
- "Desigualdade e pobreza continuaram caindo no Brasil mesmo com crise, revela Ipea". Agência Brasil. Retrieved 2009-10-29.
-  Jornal Nacional. Retrieved on 2012-02-01. (Portuguese).
- "Doing Business in Brazil 2012". World Bank. Retrieved 2011-11-21.
- "Brazilian Trade Balance: Consolidated Data". Ministério do Desenvolvimento, Indústria e Comércio Exterior. 2012. Retrieved 2012-04-16.
- "Export Partners of Brazil". CIA World Factbook. 2012. Retrieved 2013-07-25.
- "Import Partners of Brazil". CIA World Factbook. 2012. Retrieved 2013-07-25.
- PIB: Dívida pública permanece em 41,4% em agosto Tendências e Mercado. Retrieved on 2010-11-25. (Portuguese).
- "Sovereigns Rating List". List. Standard & Poor's. Retrieved 30 March 2014.
- "Fitch Affirms Brazil's Ratings at 'BBB'; Outlook Stable". Reuters. 18 July 2013. Retrieved 30 March 2014.
- "UPDATE 1-Moody's could cut Brazil rating outlook if economy disappoints". Reuters. 6 January 2014. Retrieved 30 March 2014.
- "International Reserves and Foreign Currency Liquidity - BRAZIL". International Monetary Fund. 2012-04-09. Retrieved 16 April 2012.
- Is Brazil’s Economy Getting Too Hot? Forbes. Retrieved on 2011-10-24.
- Global Economics Paper No: 153 Goldman Sachs. Retrieved on 2011-10-24.
- Elliott, Larry (2011-01-06). "GDP projections from PwC: how China, India and Brazil will overtake the West by 2050". The Guardian (London).
- Global Competitiveness Report 2009-2010 World Economic Forum. Retrieved on 2011-10-24.
- Kroll, Luisa (10 March 2010). "The World's Billionaires". Forbes.
- About Brazil Brazilian Government. Retrieved on 2011-10-24.
- Brazil's Currency Wars - A "Real" Problem Sounds and Colours. Retrieved on 2011-10-24.
- Agriculture Brazilian Government. Retrieved on 2011-10-24.
- Popclock IBGE
- Indicators Brazilian Government. Retrieved on 2011-10-24.
- "Government breaks reinsurance monopoly, discards privatization (in Portuguese)". Retrieved 2008-04-29.
- "Forbes Global 2000: Brazil". 2008-04-02. Retrieved May 2008.
- Inflation Ipea
- Average Exchange Rate Ipea
- Stacked: Export Destinations of Brazil. DataViva. Retrieved on 01/09/14.
- Sustainable growth Brazilian Government. Retrieved on 2011-10-24.
- Transparency by country 2009 Transparency International. Retrieved on 2011-10-24.
- Control and reform Brazilian Government. Retrieved on 2011-10-24.
- Consistent policies Brazilian Government. Retrieved on 2011-10-24.
- Mergers and Acquisitions: Brazil Institute of Mergers, Acquisitions and Alliances. Retrieved on 2011-10-24.
- http://web.grupomaquina.com/maquinaNet/techEngine?sid=MaquinaNet&command=noticiaClippingSite&action=visualizar&idNoticia=2368106366895 A spirit for entreprise, Finantial Times Online, May 8th,2013
- http://www.gemconsortium.org/docs/2645/gem-2012-global-report GEM 2012 Global Report
- "GDP projections from PwC: how China, India and Brazil will overtake the West by 2050" – PwC forecasts of GDP (PPP), January, 2011.
- Median income - Brazilian Supreme Court Folha de S. Paulo. Retrieved on 2011-10-24. (Portuguese).
- GDP per capita - Brazilian cities in 2006 Brazilian Institute of Geography and Statistics. Retrieved on 2011-10-24. (Portuguese).
- 2013 Minimum Wage - Brazil UOL. Retrieved on 2013. (Portuguese).
- Report for Selected Countries and Subjects: Brazil International Monetary Fund. Retrieved on 2011-10-24.
- Median Incomes in Brazil by Career in 2007 (FGV) Veja. Retrieved on 2011-10-24. (Portuguese).
- São Paulo Stock Exchange Official website
- Central Bank of Brazil Official website
- "The Informality Trap: Tax Evasion, Finance, and Productivity in Brazil" World Bank Public Policy Journal
- Macroeconomic Policy, Growth and Income Distribution in the Brazilian Economy in the 2000s Center for Economic and Policy Research
- Comprehensive current and historial economic data
- World Bank Trade Summary Statistics Brazil 2012
- Information about Brazilian banks in English
- Furtado, Celso. Formação econômica do Brasil. (http://www.afoiceeomartelo.com.br/posfsa/Autores/Furtado,%20Celso/Celso%20Furtado%20-%20Forma%C3%A7%C3%A3o%20Econ%C3%B4mica%20do%20Brasil.pdf)
- Prado Junior, Caio. História econômica do Brasil. (http://www.afoiceeomartelo.com.br/posfsa/Autores/Prado%20Jr,%20Caio/Historia%20Economica%20do%20Brasil.pdf)
- Baer, Werner. The Brazilian Economy: Growth and Development. 5th. Westport, CT: Praeger Publishers, 2001