Brazil Economics and Business

Brazil is the largest country in South America with a population of over 210 million people. It is a leading emerging market and has one of the most diversified economies in the world. Brazil has abundant natural resources, including oil, iron ore, and timber, as well as an abundance of agricultural products such as sugarcane, coffee, and soybeans. The Brazilian economy is largely driven by services (including tourism) which account for over 70% of GDP. Other important sectors include manufacturing, retail trade, construction, and mining.

According to cheeroutdoor, the Brazilian government has implemented several economic reforms since the early 1990s to help stimulate economic growth and reduce poverty. These reforms included privatization of state-owned companies and deregulation of certain industries such as banking and telecommunications. In addition, Brazil has also implemented strong fiscal policies to reduce inflation and encourage foreign investment. The government has also invested heavily in infrastructure projects such as roads and railways to improve transportation links between cities across the country.

In recent years, Brazil’s economy has been affected by a number of external factors including low commodity prices, weak global demand for its exports, political uncertainty due to corruption scandals, and a currency crisis in early 2019 that caused its currency to depreciate sharply against the US dollar. Despite these challenges Brazil’s economy remains resilient due to its diversified economy that includes both primary sector activities such as agriculture and extractive industries as well as services activities like finance and tourism. The Brazilian government remains committed to implementing pro-growth policies that will help stimulate economic activity while reducing poverty levels across the country.

Business

Until 1990, Brazil’s economy was characterized by a strong state-stimulated development, and the country was sometimes called the world’s largest capitalist planning economy. This state-led capitalism was mainly expressed in heavy investments in infrastructure (roads, power plants) and heavy base industries, while the manufacturing industry provided the domestic market with consumer goods in order to eliminate the need for imports. At the same time, mainly tropical agricultural products were exported.

Brazil GDP (Nominal, $USD) 2003-2017

The results of this policy were periodically outstanding GDP growth and large trade surpluses (which were necessary for the repayments on the huge government debt). The primary objective, economic growth, was achieved but at the price of strong business cycles, galloping inflation and, above all, an extremely oblique social and regional distribution of resources.

To remedy the imbalances in the economy, in 1994, an economic reform package called the Real Plan was implemented. The package got its name after the new currency real, the value of which was linked to the US dollar. The state budget was tightened, liberalization and privatization were introduced and foreign investment was encouraged, including through regional integration programs such as Mercosur. Inflation fell, growth accelerated and domestic consumption increased.

  • Paulsourcing: Top 10 tips for doing business in Brazil, covering country profile and market entry requirement.

After the financial crises in the late 1990s, the government decided to allow the currency to flow freely, which led to a large loss in value, currency fluctuations and a few years of low growth. However, the economy soon picked up again and growth was steadily around 5 percent for many years. Brazil was one of the world’s five largest emerging economies along with the Russian Federation, India, China and South Africa (the so-called BRICS countries).

In recent years, growth has slowed as a result of the financial crisis, falling world market prices of commodities and a weakening of the currency against the US dollar, forcing interest rate hikes.

Business

Year Change in GDP (%) Government debt share of GDP (%) Budget deficit’s share of GDP (%) Inflation (%) Unemployment of total workforce (%)
2016 -3.8 76.3 7.1 8.7 9.2
2015 -3.8 73.7 9.3 9.0 6.8
2014 0.1 63.3 7.6 6.3 4.8
2013 3.0 60.4 4.9 6.2 5.4
2012 1.9 62.3 3.9 5.4 5.5
2011 3.9 61.2 4.1 6.6 6.0
2010 7.5 63.0 4.5 5.0 6.8
2009 -0.1 64.9 3.4 4.9 8.1
2008 5.1 61.9 2.6 5.7 7.9
2007 6.1 63.7 3.3 3.6 9.3
2006 4.0 65.8 3.3 4.2 10.0
2005 3.2 68.6 3.2 6.9 9.8
2004 5.8 70.1 2.6 6.6 11.5
2003 1.1 73.8 4.0 14.7 12.3
2002 3.1 78.8 4.0 8.4 11.7
2001 1.4 70.1 2.9 6.8 11.3
2000 4.4 65.6 3.5 7.0 7.1

Source: IMF, OECD and World Bank

Agriculture

Abbreviated as BRA by abbreviationfinder.org, Brazil is one of the world’s largest agricultural nations. The share of employment has declined rapidly in recent decades, but the rate of development varies widely within the country. The cultivated land makes up 6 percent of the land area and is mainly found along the coast and along the Amazon River’s lower course. Brazil has a very skewed ownership structure, with 90 percent of farm units being less than 100 ha and 80 percent of agricultural land belonging to the remaining 10 percent. Attempts to rectify this imbalance have been made, but the emphasis on exports during the 1990s meant that large goods producing sugar cane, oranges and soybeans increased their share of the area cultivated.

The country grows and exports more coffee and sugar than any other country. The production of cocoa, cotton and jute is also extensive. In 2013, 3 million tonnes of coffee were produced; the main production areas are located in the states of São Paulo, Paraná, Espírito Santo and Minas Gerais. Sugarcane production amounted to 768 million tonnes in the same year, and the main cultivation areas are located in the state of São Paulo and along the country’s northeastern coast. Cocoa is grown in the narrow coastal strip south of Salvador, and production amounted to 256,000 tonnes.

The country is the world’s second largest producer of soybeans; In 2013, 82 million tonnes were produced. The cultivation takes place mainly in southern Brazil and in the state of São Paulo. In addition to soybeans, cereal production is also dominated by maize and rice. Wheat is also grown, but domestic production only covers 30 percent of the need. Fruit crops increased in importance during the 1980s and 1990s, and Brazil is now the world’s leading exporter of orange juice concentrate. The country also has significant meat and milk production, which accounts for a quarter of agricultural sales. Brazil’s beef exports are the second largest in the world. Livestock farms are found mainly in the states of São Paulo, Minas Gerais, Goiás, Bahia, Mato Grosso and in recent years also on the outskirts of the Amazon basin.

Forestry

About half of Brazil’s area is forested. Forest clearing has ancient origins in Brazil. Up to 1700, the narrow forest belt in the northeast, south of Natal, had been cleared and given place for sugar cane plantations. Almost all agricultural land was obtained up to the 1980s by the precipitation of the dense forest along the coast and of the more open forest within. From southern Minas Gerais to Santa Catarina, the dense forest stretched far into the country. At the new cultivation front there were always sawmills that used to be a number of the countless tree species.

The modern sawmill industry is based mainly on the subtropical bread tree in the south. Eucalyptus has been planted in the south and east. paper industry. In the hinterland, wood is important as fuel and for the production of charcoal. Many sought after tree species are found in the extremely sparsely populated Amazon, but small quantities obtained per sanctuary and high transport costs have severely limited the harvest.

Fishing

Fishing is one of the most underdeveloped industries in Brazil. Although fish is the most important source of protein in the Amazon and along the coast in the Northeast, it is a matter of fishing for housing needs, which is not included in official statistics. Like Brazil, for example, New Zealand’s high meat consumption, and people generally eat relatively little fish. In 2007, a total of 1.1 million tonnes of fish were landed. Commercial fishing takes place on the coasts in the northeast and in the south. This includes species that provide large quantities of fishmeal, and food fish caught by boats from industrialized countries with advanced technology and an unbroken freezer chain in their home country. This is missing in tropical Brazil.

Mineral

Brazil is very rich in minerals. Large distances and high transport costs, however, have hampered the extraction of these resources. While the mining sector accounts for only 2 percent of GDP, it is important for the country’s exports and industrial production and is now Brazil’s most dynamic economic sector. Gold was found in the inner parts of Brazil in 1694 and diamonds further north in the Espinhaço Mountains near Diamantina. Brazil was the world’s largest gold producer during the 18th century, but the gold boom was over at the turn of the 19th century.

Even in modern times, a large part of the mining industry is located in Minas Gerais, but in the 1990s, the state of Pará took over the role of the largest iron producer. The world’s largest iron ore deposit was found in 1967 in the Carajás mountains. The ore there is of high quality, and the mining takes place in open quarries at favorable costs. A more than 900 km long railway has been built from São Luís (in Maranhão), whose port has been dredged to take large bulk vessels. Brazil also has large quantities of tin, aluminum, nickel, copper, uranium, manganese, lead and several other metals and minerals. A new gold find in eastern Amazon is probably Latin America’s largest and is expected to significantly increase gold production. The country is now the world’s leading iron ore exporter, but also has its own significant steel production with facilities in Rio de Janeiro, Minas Gerais and Espírito Santo.

Energy

Energy needs in Brazil are met by more than 90 percent of water energy, 4 percent of oil, 2 percent of coal and 1 percent of nuclear power. Crude oil reserves are estimated at more than 12 billion barrels. Only the Roncador field off the coast of Rio de Janeiro, discovered in 1996, is believed to contain the equivalent of 2.7 billion barrels. Huge reserves, possibly exceeding 2 billion barrels, are also found in the Marlim field in Baía de Campos. Since 1983, crude oil production has increased by 340,000 barrels per day to more than 1.5 million barrels, placing Brazil as the third largest producer in Latin America after Mexico and Venezuela. The PROALCOOL project (extraction of ethanol from sugar and cassava) was added in 1976 to reduce Brazil’s oil dependency. As oil prices have fallen, the program has declined in importance.

Modern power transmission technology has enabled the expansion of large hydropower plants in the south and east. Water resources are very large in Brazil. At the Itaipu dam in the Paraná River there is one of the world’s largest hydropower plants with a capacity of 14,000 MW. The Tucurui dam in the Tocantin River is another large facility, which was commissioned in 1984.

Nuclear power has been an extremely expensive and unsuccessful experiment in Brazil. The first nuclear power plant, Angra I (656 MW), which was commissioned in 1985, has often been shut down or only utilized to 10 percent of its capacity. A second reactor, Angra II, was commissioned in 2000 and plans are also in place for four new reactors.

Industry

Brazil is the most important industrial nation in South America. The manufacturing industry accounts for just over 20 percent of GDP and employs 10 percent of the workforce. The industry has been built around machines, electrical appliances, building materials, rubber, refined timber products, chemicals, cars, tractors and other vehicles, including oil platforms and aircraft. In recent decades, the industry has expanded, focusing on growth and future industries such as pharmaceuticals and IT.

The large market has attracted multinational companies to establish assembly plants, usually in the Sao Paulo region, which has become Latin America’s leading industrial metropolis. For regional policy reasons, some industry has been ruled out in the periphery. Electronic industry has been placed in the free zone of Manaus in the Amazon.

Foreign trade

Brazil’s previous large trade surplus was exchanged in the 1990s in deficit, mainly due to import liberalization and an overvalued currency in the tracks of the Real Plan in 1994. Since 2000, however, foreign trade has returned with surplus, partly as a result of currency devaluation in 1999. Foreign trade has since 1960- The century has undergone several major structural changes. Coffee used to be the dominant product, but exports are now much more versatile. The main export products are vehicles, iron and steel, oil, soybeans, animal feed, iron ore and coffee. Imports mainly consist of machinery, vehicles, electrical equipment, chemicals and cereals. The main trading partners on the export side are China, USA and Argentina, the same countries that dominate imports.

  • COUNTRYAAH: Find major trading partners of Brazil, including major exports and major imports with latest trade value and market share as well as growth rate.

Tourism and gastronomy

Tourism has increased from 1.6 million tourists arriving in 1993 to 6.6 million in 2016, and foreign tourism provides the country with more than 5 billion US dollars in revenue annually. The tourists come mainly from the rest of Latin America, the USA, Germany and Italy. Brazil’s size and the variation in climate, landscape and cultural traditions mean that the country exhibits a wide variety of tourist destinations.

A visit to Brazil usually begins in Rio de Janeiro. Architecturally, the city center is worth seeing with Baroque churches and palaces, but even more interesting is the city’s outstanding location: the view from Corcovado (with the famous Christ statue) over the city, the sugar peak and the Guanabara Bay with the Atlantic farther into the haze are magnificent. You can still swim in Copacabana, Ipanema and Leblon, almost inside the city, but you get the best baths if you go to the smaller communities or fishing villages in the southwest. The carnival also attracts many visitors to the city. The culture enthusiast finds many places of interest in the mountains north of Rio de Janeiro, not least the imperial summer capital of Petrópolis with palaces, administrative buildings and patrician residences, all well-preserved from the mid-1800s.

Note: the capital city of Brazil is Brasília with a population of 3 million (estimate 2019). Other major cities include São Paulo with a population of 12.3 million, Rio de Janeiro with a population of 6.7 million, Salvador de Bahía with a population of 2.9 million, Fortaleza with a population of 2.7 million, Belo Horizonte with a population of 2.5 million, Manaus with a population of 2.2 million (2019 estimate).

The metropolis of São Paulo may be primarily a destination for business travelers, but there is also one of Latin America’s most notable art museums, essentially created through acquisitions from European private collectors in the 1940s, with Italian 15th-century painting, Goya portraits, Degas sculptures, Impressionists etc. go to those responsible for administration or political institutions; the city appears as an artificial but interesting urban planning and architectural overall creation, characterized by Oscar Niemeyer, the country’s leading modern architect. In the easternmost parts of the country there are, among other things. the cities of Salvador, Recife, the former capital Olinda and João Pessoa, all of which have interesting colonial architecture, fine beaches and a strong African connection that gave this region its special culture.

The nature enthusiast is attracted by the vast and yet partly untouched Amazon area, but also by the more accessible Pantanal in western Brazil. There, over 650 bird species, many mammals and fish can be experienced in a rolling plain landscape with elements of lakes, wetlands and rivers, partly national park, partly unchanged pasture with livestock. Attractions include the Iguacú waterfall on the border with Argentina and the Fernando de Noronha archipelago in the Atlantic.

In gastronomic terms, Brazil is very rich and diversified; the large land area holds many different regional cuisines and the influence of African, Portuguese and Native American cuisine is striking, most noticeable in the north. Manioc flour, rice and black beans are common staple products throughout the country, as is everywhere a preference for chili peppers. Originating in Rio de Janeiro, the must have the right feijoada has spread throughout the country and is considered by most to be Brazil’s national law. It consists of several types of salted, cooked meat – including tongue and pork feet – and sausages served with black beans, cabbage, orange and a sauce with, among other things. cayenne pepper, vinegar and chopped tomato. Regional features are often dependent on the geographical location and the raw materials available; in the Northeast, seafood is everyday food and shrimp are included in a myriad of recipes. in fresh or dried form in the chicken dish xinxin de galinha. In the middle parts, the steak dominates, and restaurants specializing in grilled meat, churrascarias, are common. Further south, you can see the food more often dishes with intestines, as well as poultry in combination with fruit. São Paulo is happy to serve cuzcuz paulista, a variant of the African couscous made on steamed cornmeal. Wine is grown in many parts of the country, but the white wines of the southern states (Rio Grande do Sul and Santa Catarina) are preferred; Brazil, by the way, makes a sparkling wine according to the champagne method that is not practiced. The excellent Brazilian light beer should also be highlighted.

Brazil Economics and Business

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