GDP per capita in Brazil

Brazil GDP per capita (USD) | Economic News & Forecasts

Brazil - GDP per capita (U.S. Dollars)

Economy lingers in worst recession ever

The perfect storm of high unemployment, tight credit conditions and political turmoil held Latin America’s largest economy in the deepest recession on record last year. GDP plummeted 3.6% in 2016, a slim improvement from 2015’s 3.8% decrease. The result was just slightly worse than FocusEconomics analysts’ projection of a 3.5% fall for the year. While economic data has picked up from rock bottom—the contraction in GDP moderated from 2.9% annually in Q3 to a 2.5% drop in Q4—dynamics remain feeble and the road to recovery is likely to be long as austerity measures dampen consumption. On a quarterly basis, the economy deteriorated in Q4 falling a seasonally-adjusted 0.9%, after a 0.7% fall in Q3.

Looking at the result for the fourth quarter, steep contractions were recorded in almost all components of GDP as activity remains depressed due to high unemployment and low levels of business and consumer confidence. Private consumption fell a steep 2.9% over the same period of the previous year. However, the result was the smallest contraction in a year and a half as easing inflation reduces the squeeze on household income. Fixed investment plummeted 5.4%, after a significant 8.4% drop in the previous quarter. Despite cuts to the Central Bank’s SELIC rate, a high interest rate environment persists and weak credit growth is hurting investment. Meanwhile, government consumption recorded a slight contraction of 0.1%, the best result since Q2 2015, and inventories contributed positively.

The external sector also dragged on activity, and exports of goods and services plunged 7.6% in Q4, contrasting Q3’s slight 0.2% expansion. A stronger real has hurt export sales, while still-low commodity prices are weighing on earnings. The appreciated real and improvement in the domestic economy drove the contraction in imports to abate. Imports fell 1.1% in Q4, the smallest contraction since Q2 2015.

Q4’s data confirm that the economy has improved although it is still stuck in a deep recession. Incoming data for 2017 has been more positive and suggests that green shoots are emerging. In addition, the government announced an infrastructure concessions program that is expected to raise over USD 14 billion in investment to support the recovery in March.

An environment of lower inflation, improved confidence and easier monetary policy should support a return to growth in 2017, however, the road to recovery will likely be long. Austerity measures are expected to hamper consumption this year and political noise will remain high as testimony from a massive corruption scandal is released.

LatinFocus Consensus Forecast panelists expect the economy to grow 0.6% in 2017, which is unchanged from last month’s estimate. For 2018, the panel sees the economy growing 2.2%.

Brazil - GDP per capita (USD) Data

2012  2013  2014  2015  2016  
GDP per capita (USD)8,643  11,304  13,245  12,364  12,278  

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Brazil Facts

Bond Yield10.130.70 %Apr 06
Exchange Rate3.140.72 %Apr 06
Stock Market64,223-0.85 %Apr 06

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