Brazil: land of opportunities

Release Date

07 July 2011

Forecasted to be the 5th largest economy in the next decade, Brazil plays a strategic role in the global economic and geopolitical arena. Currently, the country shows a balanced blend of steady economic growth and environmental sustainability that combined with effective wealth distribution programs create an outstanding climate for business growth.

Stable economic growth and social and environmental sustainability

The solid Brazilian economic basis led the country to a development cycle, with growth in Gross Domestic Product (GDP), foreign reserves of over US$ 320 billion, a stable financial system and important social gains. Among them is the reduction in unemployment rate - 6.7% in 2010, the lowest since 2002 - as well as in social inequality, which has dropped 6 percentage points since the beginning of the decade, according to the National Household Sample Survey (PNAD).

Anti-cyclical measures taken by the Brazilian government helped the country to minimize impacts of the global financial crisis. In 2009, the Brazilian economy remained resilient, growing between 0.5% and 1.5%. In 2010, Brazil resumed the same pace of the pre-crisis period, advancing in a cycle of economic growth, social development and fiscal responsibility.

Macroeconomic and social structure for a period of long-term transformation

From 2003 to 2008, the Brazilian government has kept inflation relatively low, repurchased all sovereign debt originated in the 1990s, improved risk profile of its government bonds and substantially increased the level of foreign reserves - today Brazil is the fourth largest owner of obligations of the U.S. Treasury.

Macroeconomic policies adopted in Brazil in recent years have been quite effective. The proof is that the impacts of the severe global financial crisis that began in 2008 on the Brazilian economy were quite moderate. One of the differentials in Brazil compared to other countries is the lack of balance of payments crises.

The greatest freedom in external accounts has enabled the Brazilian government to implement a set of anti-cyclical fiscal and monetary measures, which were of great importance in reducing the negative impact of the global crisis on the Brazilian economic activity, with a vigorous program of social inclusion and the increase in the population’s income. For the first time since the 1970s, the Brazilian economy has proved to be more resistant than that of most developed and developing countries.

With solid basis and a strong market, Brazil was able to successfully promote a range of measures against the crisis. On the one hand, it adopted an expansionary monetary policy; on the other, it introduced a proactive fiscal policy. The sum of the two actions injected money into the economy by stimulating consumption, keeping jobs and increasing the business dynamics.

Strong domestic market

With 192 million people, Brazil has a large and fast growing consumer market. Over the past five years, more than 24 million Brazilians moved out of poverty and another 27 million have been incorporated into classes A, B and C. Due to successful public policies on income distribution and improvement of employment rates in recent years, the average income of the Brazilian population has been increasing since 2004, at the same time as inequality in income distribution has been decreasing.

The power of such a strong domestic market was essential to sustain the economic growth of Brazil, even in the most severe phase of the global financial crisis.

Cultural and natural wealth, vast and diverse population

Brazil is a rich mix of cultures, composed of Indians, Europeans, Africans and Asians settled in the country. This diversity of ethnic groups in one place shaped a plural and tolerant society. Brazilians respect different cultures, easily welcome various traditions and incorporate new habits and working methods.

Another quality of Brazil is the large amount of natural resources available, such as minerals and agricultural products. Over 300 million hectares of agricultural land in privileged geographic conditions are important to place Brazil as a key player in the international market.

Foreign Trade - opening up markets and multilateralism

Brazil is the largest economy in South America, with a Gross Domestic Product (GDP) of around 50% of the regional total amount. In recent years, the country has been consolidating its position as an important platform for the American continent as well as Southern Africa. Over the past four years, exports of Brazilian products and services have doubled, and imports have grown at a similar pace.

Renewable, abundant and clean energy

Brazilian energy is abundant and diverse. The country is self-sufficient in oil and has several sources of clean energy such as hydro energy, wind power and ethanol. Today, 46% of energy production in Brazil is based on renewable sources.

About 95% of the Brazilian population has access to electricity. There are over 61.5 million operating lines that reach 99% of Brazilian municipalities.

Out of this total, 85% are residential customers and 15% are commercial and / or industrial customers.

Most of the Brazilian electric power comes from hydroelectricity (76%). With 260 GW, Brazil has the largest potential for hydropower generation in the world. From this total, only 30% (77 GW) are being generated by existing plants in the country. There is still a potential of 126 GW to be exploited, of which 70% are concentrated in the Tocantins / Araguaia and Amazon basins.

Practically 100% of hydropower capacity in the South, Southeast and Northeast regions of Brazil are already being exploited. Therefore, the efforts to expand the hydroelectric capacity of the country are currently concentrated in the North region. Two plants will be built in the region in the Madeira River (Amazon River Basin) - Santo Antônio, with an estimated capacity of 3,150 MW and Jirau (3,300 MW). The construction of these two plants should increase the installed capacity of the country by 6%.

The industrial sector uses 46.7% of the electricity consumed in Brazil, followed by residential (22.1%), business (14.2%), public (8.2%), agriculture (4.3%), energy (4.2%) and transport (0.4%) sectors.

Democratic and institutional stability

Having received US$ 45 billion in 2008, Brazil is the leading destination for Foreign Direct Investment in Latin America. Foreign investors have security and legal permission to send profits to their home countries, and foreign capital is considered as if it were national. Moreover, Brazil has double taxation agreements with several countries in the world.

Since 2008, Brazil is classified as investment grade, the best mark for receiving foreign investment possible, by the rating agencies Standard & Poor's, Moody's and Fitch. According to analysts, this recognition is a reflection of the continual trend in the Brazilian economic policy. The Brazilian institutional environment ensures security to investors, who can also count on a modern and efficient financial system.

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