Economy of Brazil

Economy of Brazil
São Paulo Stock Exchange
Rank	8th
Currency	Brazilian real (BRL, R$)
Fiscal year	Calendar year
Trade organisations	Unasul, WTO, Mercosul, G-20 and others
Statistics
GDP	$1.910 trillion (2009) (nominal; 8th)[1] $2.930 trillion (2009) (PPP; 9th)[1]
GDP growth	-0.2% (2009)[2]
GDP per capita	$9,960 (2009) (nominal; 60th)[1] $15,280 (2009) (PPP; 75th)[1]
GDP by sector	agriculture: 5.5% industry: 28.7% services: 65,8% (2007)[3]
Inflation (CPI)	4.31% (2009)[4]
Population below poverty line	23.5% (2009)[5]
Gini index	49.3 (June 2009)[6]
Labour force	95.21 million (2009 est.)
Labour force by occupation	agriculture: 20%, industry: 14% and services: 66% (2003 est.)
Unemployment	7.3% (May 2010)[7]
Main industries	airplanes, steel; iron ore, coal; machine building; armaments; textiles and apparel; petroleum; cement; chemicals; fertilizers; consumer products, including footwear, toys, and electronics; food processing; transportation equipment, including automobiles, rail cars and locomotives, ships, and aircraft; electronics; telecommunications equipment, commercial space launch vehicles, satellites, real estate, brewing, tourism
External
Exports	$158.9 billion (2009 est.)[8]
Export goods	transport equipment, iron ore, soybeans, footwear, coffee, autos, automotive parts, machinery
Main export partners	United States 14.0%, Argentina 8.9%, China 8.3%, Netherlands 5.3%, Germany 4.5%, Japan 3.1% (2008)
Imports	$136 billion (2009 est.)[8]
Import goods	machinery, electrical and transport equipment, chemical products, oil, automotive parts, electronics
Main import partners	United States 14.9%, China 11.6%, Argentina 7.7%, Germany 6.9%, Japan 3.9%, Nigeria 3.9%, South Korea 3.1% (2008)
Gross external debt	$216.1 billion (31 December 2009 est.)
Public finances
Public debt	$103.2 billion; 6.4% of GDP (2008 est.)
Credit rating	BBB- [9]
Foreign reserves	$285.7 billion (November 2009)[10]
Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars

The Economy of Brazil is the world's eighth largest economy by nominal GDP and ninth largest by purchasing power parity.^[11] Brazil has moderately free markets and an inward-oriented economy. Its economy is the largest among all South 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 5%. In Reais (Brazilian currency), its GDP is estimated at R$ 2.9 trillion dolars in 2009. The Brazilian economy has been predicted to become one of the five largest economies in the world in the decades ahead to come, the GDP per capita following and growing.^[12]

Brazil is a member of diverse economic organizations, such as Mercosul, SACN, G8+5, G20 and the Cairns Group. Its trade partners number in the hundreds, with 60% of exports mostly of manufactured or semimanufactured goods.^[13] Brazil's main trade partners in 2008 were: Mercosul and Latin America (25.9% of trade), EU (23.4%), Asia (18.9%), the United States (14.0%), and others (17.8%).^[14]

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.^[15]

The owner of a sophisticated technological sector, Brazil develops projects that range from submarines to aircraft and is involved in space research: the country possesses a satellite launching center and was the only country in the Southern Hemisphere to integrate the team responsible for the construction of the International Space Station (ISS).^[16] It is also a pioneer in many fields, including ethanol production.

Brazil, together with Mexico, has been at the forefront of the Latin American multinationals phenomenon by which, thanks to superior technology and organization, local companies have successfully turned global. These multinationals have made this transition notably by investing massively abroad, in the region and beyond, and thus realizing an increasing portion of their revenues internationally.^[15]

Brazil is also a pioneer in the fields of deep water oil research from where 73% of its reserves are extracted.^[13] According to government statistics, Brazil was the first capitalist country to bring together the ten largest car assembly companies inside its national territory.^[13]

History

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 colonisation 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). Since then, Brazil experienced a period of strong economic and demographic growth accompanied by mass immigration from Europe (mainly from Portugal, Italy, Spain and Germany) until the 1930s. In the Americas, the United States, Argentina, Brazil, and Canada (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 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.^[13] 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/year last decade,^[13] 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.^[13] The agricultural sector and the mining sector also supported trade surpluses which allowed for massive currency gains (rebound) and external debt paydown.

Components of the economy

The service sector is the largest component of GDP at 66.8%, followed by the industrial sector at 29.7% (2007 est.). Agriculture represents 3.5% of GDP (2008 est.). Brazilian labor force is estimated at 100.77 million of which 10% is occupied in agriculture, 19% in the industry sector and 71% 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
Agriculture growth rate	9.2% (2008)
Labor force	15% of total labor force
GDP of sector	3.5% of total GDP

A performance that puts agribusiness in a position of distinction in terms of Brazil’s trade balance, in spite of trade barriers and subsidizing policies adopted by the developed countries.^[17]

In the space of fifty five years (1950 to 2005), the population of Brazil grew from 51 million to approximately 187 million inhabitants,^[18] an increase of over 2% 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.^[17] 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.^[17]

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.^[17]

Brazilian exports in 2006.

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.^[17]

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,^[19] responsible for exports surpassing the mark of US$ 1 billion/year.^[17]

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% of global exports of raw cane and refined sugar; it is the world leader in soybean exports and is responsible for 80% 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.^[17]

Industry

Industrial production
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% 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 relatively sophisticated services industry as well. During the early 1990s, the banking sector accounted for as much as 16% 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. The São Paulo and Rio de Janeiro stock exchanges are undergoing a consolidation and the previously monopolistic reinsurance sector is being opened up to third party companies.^[20]

As of^[update] 31 December 2007, there were an estimated 21,304,000 broadband lines in Brazil. Over 75% of the broadband lines were via DSL and 10% 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 cooking-grade coal required in the steel industry is in short supply.

Largest companies

In 2008, 34 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.^[21] The 10 leading companies are:

Energy

The Brazilian government has undertaken an ambitious program to reduce dependence on imported oil. Imports previously accounted for more than 70% of the country's oil needs but Brazil became energy independent in 2006. Brazil is one of the world's leading producers of hydroelectric power, with a current capacity of about 108,000 megawatts. Existing hydroelectric power provides 80% of the nation's electricity. Two large hydroelectric projects, the 15,900 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 17 more nuclear plants by the year 2020.

Economic status

"In Brazil a labor-union leader has presided over an amazing period of social and economic progress. It is also one of the few countries that have successfully managed to reduce economic inequality at a time when everywhere else inequities are deepening. Successive Brazilian governments, of rival political parties, have succeeded in improving education, health and the living standards of millions of impoverished citizens who have now joined a growing middle class. Brazil has an energy policy that has spawned the world's most vibrant biofuels industry. In 1995, 15 percent of Brazilian school-age children did not go to school. In 2005, this fell to 3 percent, and today Brazil has practically achieved universal basic education."

— Moisés Naím, Newsweek, June 2009 ^[25]

Sustainable growth

After being discovered by Portugal 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 primitive goods, such as sugar, rubber and gold. Today, 84% 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% and 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.^[26]. The Brazilian government also launched a program for economic development acceleration called Programa de Aceleração do Crescimento, aiming to spur growth.

Brazil's transparency ranking status in the International World is 75th according to Transparency International.^[27] It is equal with Colombia, Peru and Suriname.

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.^[28][29]

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% 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.^[30]

Income in Brazil

The median income of the ministers of Supreme Federal Court is more than R$ 300,000.^[31]

The city of Araporã, Minas Gerais, has the largest median income of Brazil, R$ 260,000.^[32]

São Paulo has the largest GDP of the country.

The minimum wage set for the year of 2010 is R$6,630.00 or R$510 per month plus an additional 13th salary (R$ 255.00 in June and R$ 255.00 in December).^[33] The GDP per capita in 2008 was $10,465.^[34]

See also

Brazil topics History First inhabitants · Colonization · Empire · Old Republic · Vargas Era · Republic of 46 · Military rule · Contemporary Politics Constitution · President · National Congress · Elections · Political parties · Foreign relations · Antarctic Geopolitics Law Law enforcement · Supreme Federal Tribunal · Human rights (LGBT rights) · Anti-discrimination laws · Order of Attorneys Economy Real · Central Bank · List of companies · Agriculture · Industry · Economic history · Telecommunications · Tourism Geography Regions · States · Municipalities · Islands · Coastline · Climate · Environment · Extreme points · Protected areas · Capitals Demographics People · Languages · Religion · Immigration · Education · Health · Crime · Social issues · Largest cities · Apartheid Culture Art (general) · Carnival · Cuisine · Cinema · Holidays · Literature · Music (Musicians · Groups) · Painting · Sculpture Transport High-speed rail · Highway · Railways · Airports · Bus Rapid Transit Energy Renewable energy · Ethanol fuel · Electricity · Vale · Petrobras · Eletrobras Sports 1950 FIFA World Cup · 2014 FIFA World Cup · 2016 Summer Olympics · 2013 FIFA Confederations Cup · National football team · National volleyball team Other topics Military · International rankings · Science and technology · Mercosul · Potential superpowers Category · Portal · WikiProject

Union of South American Nations Members Argentina · Bolivia · Brazil · Chile · Colombia · Ecuador · Guyana · Paraguay · Peru · Suriname · Uruguay · Venezuela Summits South American Energy Summit · 2004 South American Summit · 2010 South American Summit Topics Cusco Declaration · Constitutive Treaty · President Pro Tempore · Secretary General · Bank of the South · South American Parliament · Initiative for Infrastructure Integration of South America · Mercosur · Andean Community

Members of the World Trade Organization (WTO) Albania · Algeria · Angola · Antigua and Barbuda · Argentina · Armenia · Australia · Bahrain · Bangladesh · Barbados · Belize · Benin · Bolivia · Botswana · Brazil · Brunei · Burkina Faso · Burma · Burundi · Cambodia · Cameroon · Canada · Cape Verde · Central African Republic · Chad · Chile · PR China · Colombia · Democratic Republic of the Congo · Republic of the Congo · Costa Rica · Côte d'Ivoire · Croatia · Cuba · Djibouti · Dominica · Dominican Republic · Ecuador · Egypt · El Salvador · European Union¹ · Fiji · Gabon · The Gambia · Georgia · Ghana · Grenada · Guatemala · Guinea · Guinea-Bissau · Guyana · Haiti · Honduras · Hong Kong² · Iceland · India · Indonesia · Israel · Jamaica · Japan · Jordan · Kenya · South Korea · Kuwait · Kyrgyzstan · Lesotho · Liechtenstein · Macau² · Macedonia · Madagascar · Malawi · Malaysia · Maldives · Mali · Mauritania · Mauritius · Mexico · Moldova · Mongolia · Morocco · Mozambique · Namibia · Nepal · New Zealand · Nicaragua · Niger · Nigeria · Norway · Oman · Pakistan · Panama · Papua New Guinea · Paraguay · Peru · Philippines · Qatar · Rwanda · St. Kitts and Nevis · St. Lucia · St. Vincent and the Grenadines · Saudi Arabia · Senegal · Sierra Leone · Singapore · Solomon Islands · South Africa · Sri Lanka · Suriname · Swaziland · Switzerland · Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu³ · Tanzania · Thailand · Togo · Tonga · Trinidad and Tobago · Tunisia · Turkey · Uganda · Ukraine · United Arab Emirates · United States · Uruguay · Venezuela · Vietnam · Zambia · Zimbabwe All twenty-seven member states of the European Union are also members of the WTO in their own right: Austria • Belgium • Bulgaria • Cyprus • Czech Republic • Denmark • Estonia • Finland • France • Germany • Greece • Hungary • Ireland • Italy • Latvia • Lithuania • Luxembourg • Malta • Netherlands • Poland • Portugal • Romania • Slovakia • Slovenia • Spain • Sweden • United Kingdom. Special administrative region of the People's Republic of China. Designated name for the Republic of China (commonly known as Taiwan)

Union of South American Nations Members Argentina · Bolivia · Brazil · Chile · Colombia · Ecuador · Guyana · Paraguay · Peru · Suriname · Uruguay · Venezuela Summits South American Energy Summit · 2004 South American Summit · 2010 South American Summit Topics Cusco Declaration · Constitutive Treaty · President Pro Tempore · Secretary General · Bank of the South · South American Parliament · Initiative for Infrastructure Integration of South America · Mercosur · Andean Community

Mercosur · Mercosul  (Southern Common Market) Full Members Argentina · Brazil · Paraguay · Uruguay Becoming Full Members Venezuela Associate members Bolivia · Chile · Colombia · Ecuador · Peru Observers Mexico

References

External links

• Sao Paulo Stock Exchange official website
• Brazil's Central Bank official website
• UK House of Commons' Committee on Trade and Industry report, "Memorandum submitted by the Corporation of London"
• Betting on Brazil: positive news and analyses on Brazilian economic issues
• UK House http://en.wikipedia.org/skins-1.5/common/images/button_math.pngof Commons' Committee on Trade and Industry report "Trade with Brazil and Mercosur"
• European Commission Brazil Country Strategy Paper 2007-2013
• World Bank Public Policy Journal, "The Informality Trap: Tax Evasion, Finance, and Productivity in Brazil"
• Brazilian Public Debt
• Brazil Economic Scan
• [1] Why Brazil?

Further reading

• Baer, Werner. The Brazilian Economy: Growth and Development. 5th. Westport, CT: Praeger Publishers, 2001