International Trade in Brazil

News Related to International Trade in Brazil

Business outline for Brazil

Main Industry Sectors

Brazil has abundant natural resources and its economy is relatively diversified.

A major agricultural power, Brazil is the world's first producer of coffee, sugar cane and oranges, as well as one of the largest producers of soy. It also attracts many world groups in the food industry and biofuels. Brazil has the world's largest commercial livestock herd. Nevertheless, agriculture's contribution to the GDP is relatively small, accounting for only 6.6%, yet the sector represents 40% of its exports. Forests cover half of the country, with the largest ombrophilous forest in the world situated in the Amazon Basin. Brazil is the world's fourth largest exporter of timber.

Brazil is also a great industrial country. It benefits from its mineral ore wealth and is the second world exporter of iron and one of the main producers of aluminum. As an oil producer, the Brazil is aiming to become self-sufficient in the near future. The country is asserting itself more and more in the textile, aeronautics, pharmacy, automobile, steel and chemical industry sectors. Most of the large automobile manufacturers have set up their production plants in the country. The industrial sector contributes more than quarter of the GDP.
The tertiary sector represents almost two-thirds of the GDP.

Economic Overview

Brazil is one of the top ten world economic powers. Its cautious taxation and monetary policies, together with the necessary microeconomic reforms, have given the Brazilian economy solid basis allowing it to withstand the global economic crisis. After going through a slight recession in 2009 (-0.2%), the Brazilian economy returned to robust growth in 2010, driven by the resumption of international trade and supported by the government's stimulus measures. Estimated at 7.5% of the GDP, Brazil enjoys the strongest growth in Latin America.

The new president Dilma Rousseff, elected in October 2010, has made a commitment to pursue the policies of the former president Lula. The growth acceleration plan launched in 2007 includes, among others measures, a vast program of infrastructure construction, support for lending and investment funding, as well as long-term fiscal measures. The government also seeks to reduce the public debt, which amounts to up to 40% of the GDP.

Despite the good economic performance, the country continues to face large social problems. Brazil remais one of the most unequal countries in the world, with strong regional disparities, while crime and criminal violence are also on the rise. The unemployment rate is at around 7% and casual employment is widespread.

FDI in Figures

Brazil is world's number one destination of FDI flows in Latin America. After breaking its FDI record in 2008, the influx slowed down in 2009 due to the global economic crisis but it has resumed growth since. Brazil has become the 4th international investor among emerging countires and the 1st in Latin America. This country's appeal to international investors is due to different factors:
- A market of almost 200 million inhabitants;
- A booming economy;
- Easy access to raw materials; and
- A diversified economy, therefore one less vulnerable to global crises.

FDI Government Measures

The Brazilian government encourages and promotes FDI. Most of the barriers to foreign investor activity have been removed particularly on the stock market. A very large number of public companies have been privatized and many sectors deregulated over the last fifteen years.

Country Strong Points

Brazil has Universities that perform just as well as their counterparts in the OECD and a very big manpower reserve educated to all levels.  It also has extensive raw material resources. A number of sectors offer good business opportunities. The Brazilian economy is diversified and more and more manufactured goods are produced and exported. The potential of the Brazilian domestic market as well as the low cost of labor are elements which may attract foreign investors.

Country Weak Points

Despite being open to world trade, several administrative barriers cripple international trade. Valuing the real against the dollar automatically reduces the country's competitiveness against Asian competitors in some sectors. The Labor laws are very onerous, involving substantial costs to foreign companies and keeping a good part of the local business in the informal sector.

Foreign Trade Overview

Although foreign trade only represents a quarter of its GDP, Brazil is amongst the 20 top world exporters. However, the country still has enormous economic potential. The country's main trade partners are the EU, the countries of the Mercosur (Common South American market which encompasses Argentina, Brazil, Paraguay and Uruguay), the United States and China. Brazil's trade deficit is a surplus and after a drop in trade due to the global economic recession, it has improved in 2010, a trend which should continue.