About Brazil
The world crisis, followed by the reduction of the main consuming markets of the world, opened room for some emerging countries. Whereas the big world markets suffer the reflexes of the crisis, Brazil prospers with a low unemployment rate, and improvement on the population life standards, due to the economical policies applied on the country over the past years.
Unemployment rate (tax rate for the last few months in %)
Credit operations with liquid volumes and targeted, leading to greater consumming
% IGP Free Directed
Data: R$, billions, face values, and % IGP (total).
Source: IPEA; Ministerio da Fazenda
In February, free credit segment in Brazil reached R$ 1,14 trillion, with a 17,8% growth compared to February 2010, and a 1,8% growth compared to December of the same year. On the directed type of credit, the credit volume reached R$ 603 billions, with a 27,5% growth compared to February 2010 and a 2,2% growth compared to December of the same year. This performance has been pushed by the operations linked to BNDES (25,4%) and to real estate (49,6%).
Evolution of the real minimum wage
Data: R$, annual average, for prices of December of 2010.
* Accumulated in 12 months ended in February 2011
Source: IPEA; Ministerio da Fazenda
The acceleration of this growth over the last years proved a significant expansion on the per capita revenue of the Brazilian population. The real value of the minimum wage has presented, since 2003, expansion greater than the per capita income, thanks to Federal Government policies that contributed to the economical growth with the social inclusion. In the year of the crisis, 2009, the minimum wage increased 7,2%.
An important aspect from the strong economical growth relates to the Brazilian productive capability. This capability is around 80% or 85%, which hasn’t been able to cope with the demand of this developing consumer market, and consequently brought up opportunities for importing goods to Brazil.
Another considerable factor for the entrance of foreign products in Brazil is the high amount of taxes in the “made in Brazil” products. Along with this fact we can find the fiscal war between the states in Brazil, which complicates logistics, making it more expensive, and therefore being another advantage for imported products when compared to domestic ones.
With the improvement on the Brazilian population’s lives standards, both a qualitative and quantitative increase in consuming goods has taken place, home and company wise. Thus, the search for new technologies and new devices provides a great horizon for the external market, which has a potential gain within the next years with the economical and social ascension in Brazil.
Evolution of social classes (distributed population by economic class (% of population)
A/B - Social Classes – Average family income above R$ 4,800.00
C - Social Classes – Average family income between R$1.115,00 and R$4.800,00
D - Social Classes – Average family income between R$804,00 e R$ 1.115,00
E - Social Classes – Average family income below R$804,00
Since 2003, due to a better distribution of income, the so called “E” class lost about 20 million people, which were incorporated in higher social classes. In the other hand, the “C” class incorporated 29 million people and at this moment represents half of the country’s population. There’s a great trend that this is maintained for the next years.
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Rio de Janeiro - Rj, Brazilian postcard |
Salvador - BA, natural exuberance |
Brasília - DF, seat of the brazilian government |
São Paulo - SP, financial heart of Brazil |
Some more macro-economical data
The Republica Federativa do Brasil is the largest and most crowded country in Latin America, occupying 47.3 % of the South America territory, and it’s the 5th largest country in area and population in the world - 8,5 m² and over 190 million inhabitants. It’s the biggest economy in Latin America. Brazil is known as one the most open minded countries when it comes to cultural differences, and seduces by the mixing of its people. The country is also seen favorably all over the world as the most amicable people, and by the non-existing racial and cultural conflicts. Besides its natural beauties, the country has many other potentialities, becoming attractive for the realization of investments in many segments.
Brazilian economy has reached significant stability over the past years, and the participation of international capital is ever growing on most of the national activities. The country is attracted by its returning degree, since it has an open economy with low competitive costs, along with low risk and high profits. Besides that it presents other factors that highlight it economically;
• Brazil is now part of the BRIC (Brazil, Russia, India and China), and is likely to become one of the 5 largest economies of the world by 2050, as per the study conducted by the Goldman Sachs Bank.
• With its democratic institutions solidified, the seriousness of its macro-economical management, and the respect to the rights and contracts of foreign companies, Brazil is an example for Latin America and a safe port for international investors.
• Political and economical stability are now guarantees for international investors.
• Brazil is only one step away to reach the “Investment Level” from which there will be a huge growth of international investments in the country.
• The economical sector in Brazil is almost half of the Latin America’s IGP.
Evolution of Brazil's IGP (%p.y)
Average (1998-2002) Average (2003-2010) Average (2011-2014)
Data: % annual.
* Estimates of Ministerio da Fazenda
Source: IBGE; Banco Central; Ministerio da Fazenda
Domestic Demand Net External Demand IGP
Data: % annual.
* Estimates of Ministerio da Fazenda
Source: IBGE; Banco Central; Ministerio da Fazenda
After the growth of 2010, the macro-prudential measures, adjustment of income taxes, and the fiscal consolidation, it all must allow the Brazilian economy to move on with a moderate expansion, without disturbing offer and demand. For 2011-2014, the consolidation of the investments and strength of the local market will be essential for the average of the economical growth of 5.1%.
• The country has huge opportunities due to its local market of 190 million inhabitants.
• Economic stability and inflation control are generating a considerable reduction on poverty and an increase of the medium class. The emerging medium class by itself (35 million of families) is 8% larger than the population of Germany, and also larger than the populations of Belgium, Hungary, Portugal, and Sweden, Swiss, Switzerland, and Finland, Denmark, Norway, Ireland, New Zealand, and Greenland altogether.
Inflation rate (%p.y)
IPCA's Inflation Inflation Target Upper and lower limits
Data: % annual.
* Estimates of Banco Central
Source: IBGE; Banco Central; Ministerio da Fazenda
Since 2005, the inflation measured by the IPCA has been within the boundaries of the target plan for inflation. The variation of 5,9% in 2010 has been influenced, among several factors, by the quick recovery of growth after the negative impacts of the crisis in the previous year. Stability of the economical activity in a growing rate more sustainable in 2011 will lead to a lower pressure on the prices on the second semester.
• Brazil is the 5th country in the world in “Purchase Power”, with more than US$ 1 trillion in Purchasing Power Parity.
• According to a study by the Goldman Sachs Bank, the amount of people living with more than US$ 3 thousand a year will double in Brazil by 2015.
• There are no restrictions whatsoever for the removal of profits and return of invested capital by foreign investors.
Another important factor is the annual exchange rate in Brazil. The dollar value has been decreasing over the past years, which generates great attraction for the imported product, that gets cheaper and usually has better quality.
The protection in Brazil against external crisis and its consistent financial policy demonstrate that the macro-economical environment is very favorable, keeping it opened for the continuity of the growing of the market.
The market for importation will benefit with the stable economy and the appetite of the companies that seek alternatives for its products in different markets.
