Economy of Brazil

Economy of Brazil

São Paulo, the financial capital of Brazil
Currency	Brazilian real (BRL, R$)
Fiscal year	Calendar year
Trade organizations	Unasul, WTO, Mercosur, G-20 and others
Statistics
GDP	$2.200 trillion (nominal; 2017 est.) $3.330 trillion (PPP; 2017 est.)
GDP rank	8th (nominal) / 8th (PPP)
GDP growth	1.0% (2017)
GDP per capita	$10,308 (nominal; 62th; 2017 est.) $15,485 (PPP; 79th; 2017 est.)
GDP by sector	services: 76% industry: 18.5% agriculture: 5.5% (2016 est.)
Inflation (CPI)	2.78% (est. 2017)
Population below poverty line	18.2% (2017)
Gini coefficient	0.49 (2017)
Labor force	109 million (2016 est.)
Labor force by occupation	Agriculture: 10%; Industry: 39.8%; Services: 50.2% (2016 est.)
Unemployment	12% (November 2017)
Main industries	Textiles shoes chemicals cement lumber iron ore tin steel aircraft motor vehicles and parts other machinery and equipment
External
Exports	$185.2 billion (2016)
Export goods	transport equipment, iron ore, soybeans, footwear, coffee, automobiles
Main export partners	China 19% European Union 18% United States 12.6% Argentina 7.2% Japan 2.5% Other 40.7%
Imports	$143.4 billion (2016)
Import goods	machinery, electrical and transport equipment, chemical products, oil, automotive parts, electronics
Main import partners	European Union 22.6% United States 17.5% China 17% Argentina 6.6% South Korea 4% Other 32.3%
Gross external debt	$539.6 billion (June 2017)
Public finances
Government debt	73.5% of GDP (2016 est.)
Revenues	$311.9 billion (2016 est.)
Expenses	$262.6 billion (2016 est.)
Credit rating	Standard & Poor's: BB (Domestic) BB (Foreign) BB (T&C Assessment) Outlook: Negative Moody's: Ba2 Outlook: Negative Fitch: BB+ Outlook: Negative
Foreign reserves	$377.4 billion (June 2017)
All values, unless otherwise stated, are in US dollars.

GNI per capita in 2010:

  Brazil (9,390 $)

  Higher GNI per capita compared to Brazil

  Lower GNI per capita compared to Brazil

The economy of Brazil is the world's eighth largest economy by nominal GDP and eighth largest by purchasing power parity. The Brazilian economy is characterized by a mixed economy that relies on import substitution to achieve economic growth. Brazil has an estimated US$21.8 trillion worth of natural resources which includes vast amounts of gold, uranium, iron, and timber.

As of late 2010, Brazil's economy is the largest of Latin America and the second largest in the Americas. From 2000 to 2012, Brazil was one of the fastest-growing major economies in the world, with an average annual GDP growth rate of over 5%, with its economy in 2012 surpassing that of the United Kingdom, temporarily making Brazil the world's sixth largest economy. However, Brazil's economy growth decelerated in 2013 and the country entered a recession in 2014. In 2017, however, the economy started to recover, with a 1% GDP growth in the first quarter. In the second quarter, the economy grew 0.3% compared to the same period of the previous year, officially exiting the recession.

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.

History

Main article: Economic history of Brazil

File:Brazil Product Exports Treemap (2016).png

Brazil Product Exports Treemap (2016) from Harvard Atlas of Economic Complexity

When the Portuguese explorers arrived in the 16th century, the native tribes of current-day Brazil, totaled about 2.5  million people and had lived virtually unchanged since the Stone Age. From Portugal's colonization of Brazil (1500–1822) until the late 1930s, the Brazilian economy relied on the production of primary products for exports. In 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 slave labor until the late 19th century (about 3 million imported African slaves in total). In that period Brazil was also the colony with the largest amount of European settlers, most of them Portuguese (including Azoreans and Madeirans) but also some Dutch (see Dutch Brazil), Spaniards, English, French, Germans, Flemish, Danish, Scottish and Sephardic Jews. Since then, Brazil experienced a period of strong economic and demographic growth accompanied by mass immigration from Europe, mainly from Portugal (including the Azores and Madeira), Italy, Spain, Germany, Poland, Ukraine, Switzerland, Austria and Russia. Smaller numbers of immigrants also came 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, the United States and 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 showed that 4.5  million people emigrated to the country between 1882 and 1934.

Economic activity in Brazil (1977).

Currently, with a population of over 204 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.

Brazil has at least 161,500 kilometers of paved roads, more than 93 Gigawatts of installed electric power capacity and its real per capita GDP surpassed US$10,500 in 2008, due to the strong and continued appreciation of the real for the first time that 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, remarkable growth. The agricultural sector, locally called the agronegócio (agro-business), has also been remarkably dynamic: for two decades this sector has kept Brazil among 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 a downturn in Western economies, Brazil found itself in 2010 trying to halt the appreciation of the real.

Data from the Asian Development Bank and the Tax Justice Network show the untaxed "shadow" economy of Brazil is 39% of GDP.

Components

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

Agriculture production
Combine harvester on a plantation
Main products	coffee, soybeans, wheat, rice, corn, sugarcane, cocoa, citrus; beef
Labor force	15.7% of total labor force
GDP of sector	5.9% of total GDP

Main article: Agriculture in Brazil

Agribusiness contributes to Brazil's trade balance, in spite of trade barriers and subsidizing policies adopted by the developed countries.

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. Brazil created and expanded 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 subsidy program geared towards family agriculture (Pronaf), which guarantee financing for equipment and cultivation and encourage the use of new technology. With regards to family agriculture, over 800 thousand rural inhabitants are assisted by credit, research and extension programs. A special line of credit is available for women and young farmers.

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 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.

Industry

Industrial production
Embraer ERJ 145 jet manufactured by Embraer
Main industries	textiles, shoes, chemicals, cement, lumber, iron ore, tin, steel, aircraft, motor vehicles and parts, other machinery and equipment
Industrial growth rate	−5% (2015 est.)
Labor force	13.3% of total labor force
GDP of sector	22.2% of total GDP

Main article: Industry in Brazil

Brazil has the third-largest manufacturing sector in the Americas. Accounting for 28.5 percent of GDP, Brazil's 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 US 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 8 May 2008, the São Paulo Stock Exchange (Bovespa) and the São Paulo-based Brazilian Mercantile and Futures Exchange (BM&F) merged, creating BM&F Bovespa, one of the largest stock exchanges in the world. Also, the previously monopolistic reinsurance sector is being opened up to third party companies.

As of 31 December 2007, there were an estimated 21,304,000 broadband lines in Brazil. Over 75 percent of the broadband lines were via DSL and 10 percent via cable modems.

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 coking-grade coal required in the steel industry is in short supply.

Largest companies

See also: List of companies of Brazil

In 2017, 20 Brazilian companies were listed in the Forbes Global 2000 list – an annual ranking of the top 2000 public companies in the world by Forbes magazine. The 20 companies listed were:

World Rank	Company	Industry	Revenue (billion $)	Profits (billion $)	Assets (billion $)	Market Value (billion $)	Headquarters
38	Itaú Unibanco	Banking	61.3	6.7	419.9	79.2	São Paulo
62	Banco Bradesco	Banking	70.2	4.3	362.4	53.5	Osasco, SP
132	Banco do Brasil	Banking	57.3	2.3	430.6	29	Brasilia
156	Vale	Mining	27.1	3.8	99.1	45.4	São Paulo
399	Petrobras	Oil & Gas	81.1	- 4.3	247.3	61.3	Rio de Janeiro
610	Eletrobras	Utilities	17.4	0.983	52.4	7.2	Rio de Janeiro
791	Itaúsa	Conglomerate	1.3	2.4	18.1	23	São Paulo
895	JBS	Food Processing	48.9	0.108	31.6	8.2	São Paulo
981	Ultrapar	Conglomerate	22.2	0.448	7.4	12.5	São Paulo
1103	Cielo	Financial services	3.5	1.1	9.4	20.9	Barueri, SP
1233	Braskem	Chemicals	13.8	- 0.136	15.9	7.9	São Paulo
1325	BRF	Food processing	9.7	- 0.107	13.8	9.3	Itajaí, SC
1436	Sabesp	Waste Management	4	0.846	11.6	7.4	São Paulo
1503	Oi	Telecommunications	7.5	- 2	25.2	0.952	Rio de Janeiro
1515	Gerdau	Iron & Steel	10.8	- 0.395	16.8	1.4	Porto Alegre, RS
1545	CBD	Retail	12	0.139	13.9	5.9	São Paulo
1572	CCR	Transportation	2.9	0.429	7.5	11.5	São Paulo
1597	Bovespa	Stock Exchange	0.666	0.415	9.7	12.8	São Paulo
1735	CPFL Energia	Electricity	5.4	0.258	13	8.4	Campinas, SP
1895	Kroton Educacional	Higher Education	1.5	0.535	5.4	7.1	Belo Horizonte, MG

Renewable energy in Fortaleza.

Energy

Main articles: Energy policy of Brazil and Renewable energy in Brazil

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% 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 had a planned inauguration scheduled for 2014. The three reactors would have a combined capacity of 9,000 megawatts when completed. The government also plans to build 19 more nuclear plants by the year 2020.

Economic status

Statistical Table
Inflation (IPCA)
2002	12.53%
2003	9.30%
2004	7.60%
2005	5.69%
2006	3.14%
2007	4.46%
2008	5.91%
2009	4.31%
2010	5.90%
2011	6.50%
2012	5.84%
2013	5.91%
2014	6.41%
2015	10.67%
2016	6.29%
Source:
Average GDP growth rate 1950–2013
1950–59	7.1%
1960–69	6.1%
1970–79	8.9%
1980–89	3.0%
1990–99	1.7%
2000–09	3.3%
2010–13	3.4%
Source:

Sustainable growth

Portuguese explorers arrived in 1500, but 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 exports were basic raw and primary goods, such as sugar, rubber and gold. Today, 84% of exports are 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%. Agribusiness (agriculture and cattle-raising), which grew by 47% or 3.6% 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.

Brazil's transparency rank in the international world is 75th according to Transparency International.

Control and reform

Among measures recently adopted 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.

In 2017, President Michel Temer refuses to make public the list of companies accused of "modern slavery". The list, made public since the presidency of Lula Da Silva in 2003, ad to oblige companies to settle their fines and to conform to the regulations in a country where corruption of the political class by the private sector would have risked to compromise the respect for the law. The relations of the president-in-office with the "landowner lobby" were denounced by the dismissed president Dilma Rousseff on this occasion.

Central business district of Rio de Janeiro.

Consistent policies

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 and acquisitions

View of Recife.

Between 1993 and 2010, 7.012 mergers & acquisitions with a total known value of US$707 billion 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 billion.

Entrepreneurship

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, meaning that more than one in four Brazilian adults were entrepreneurs. In comparison to the other 54 countries studied, Brazil was the third-highest in total number of entrepreneurs. Ipea, a government agency, found that 37 million jobs in Brazil were associated with businesses with up to 10 employees.

Even though Brazil ranks internationally as one of the hardest countries in the region to do business due to its complicated bureaucracy. There is a healthy number of entrepreneurs, thanks to the huge market and the government programs.

The most recent research of Global Entrepreneurship Monitor revealed in 2013 that 50.4% of Brazilian new entrepreneurs are men, 33.8% are in the 35–44 age group, 36.9% completed high school and 47.9% earn 3–6 times the Brazilian minimum wage. In contrast, 49.6% of entrepreneurs are female, only 7% are in the 55–64 age group, 1% have postgraduate education and 1.7% earn more than 9 times the minimum wage.

Credit rating

Brazil's credit rating was downgraded by Standard & Poor's to BBB in March 2014, just one notch above junk.

Income

The median income of the ministers of Supreme Federal Court is more than R$300,000.

The city of Araporã, Minas Gerais, has the largest median income of Brazil, R$260,000.

Brazil is a country with extreme differences in wages. Members of the national congress make R$33,700 per month, plus an additional 13th salary, totaling R$444,800 per year (USD 140,000), but most of the population only makes minimum wage set for the year of 2017 at R$937 per month plus an additional 13th salary in the second half of December, totaling R$12,181 per year (around USD 4,000), which is 35 times less than national politicians. The GDP per capita in 2011 was US$12,906.

Career		Median salary (R$)	Starting salary (R$)	Top salary (R$)
Judge	Law	170,000	150,500	310,500
Prosecutor	Law	150,000	140,000	270,000
General director	Administration	90,000	60,000	1,450,000
Physician	Medicine	85,000	40,000	1,550,000
Judicial analyst	Law	80,000	70,000	90,000
Police chief	Law	60,000	50,000	85,000
Electronic engineer	Engineering	51,000	33,600	360,000
Civil engineer	Engineering	50,400	22,800	360,000
Other engineers	Engineering	45,000	24,000	130,000
Economic researcher	Economy	44,000	24,000	180,000
Mechanical engineer	Engineering	42,600	26,200	105,000
Department supervisor	Administration	41,964	20,076	420,000
Taxation Officer	Government	41,520	26,400	240,000
Professors	Higher education	40,440	20,000	300,000
Agronomist	Agronomy	40,000	27,600	96,000
Chemical engineer	Engineering	40,000	31,200	420,000
Systems analyst	Computer science	38,400	30,000	180,000
Dentist	Dentistry	37,800	29,400	720,000
Architect	Architecture	37,320	13,800	600,000
Lawyer	Law	36,120	20,040	3,000,000
Accountant	Accountancy	35,880	17,400	216,000
Administrator	Administration	35,400	25,080	1,800,000
Journalist	Journalism	32,880	18,000	2,400,000

See also

• Brazilian Packaging Market
• Economy of São Paulo
• List of Brazilian federative units by gross domestic product
• 2015–2017 Brazilian economic crisis
• List of Latin American and Caribbean countries by GDP growth
• List of Latin American and Caribbean countries by GDP (nominal)
• List of Latin American and Caribbean countries by GDP (PPP)

External links

• Ministry of Finance (Brazil)
• IBGE : Instituto Brasileiro de Geografia e Estatística
• World Bank Summary Trade Statistics Brazil
• Brazil profile at the CIA World Factbook
• Brazil profile at The World Bank