Brasil Economy

Brazil economic overview

Latin America's key economy:

Brazil is the largest and most populous economy in Latin America, with GDP worth around a third of the regional total. Brazil is also the third-largest emerging market after China and India. Brazil has a diverse economic structure encompassing agriculture, mining, manufacturing, and services.

Commodity superpower:

Brazil is a global leader in agriculture, renowned for being one of the world's largest producers of coffee, soybeans, beef, sugar cane and ethanol. The sector benefits from advanced agricultural technology and vast arable land. Brazil is also an important producer of iron ore and oil, and holds large reserves of minerals that will be key in the green transition, such as graphite, nickel, manganese and rare earth elements.

Trade policy:

Brazil's is the leading member of the Mercosur trade pact, along with fellow members Argentina, Uruguay and Paraguay. That said, trade policy is protectionist: Average tariff rates are more than double the Latin American average. Moreover, Mercosur's proposed trade deal with the EU has been on hold for years over environmental concerns.

Disappointing economic performance:

Brazil saw sustained economic growth in the early- to mid-2000s in line with the commodities super cycle but has languished since the global financial crisis, with GDP expanding a mere 0.6% on average in the decade to 2022.

Challenges:

A bloated, inefficient public sector, the highly fragmented Congress, elevated public debt and unemployment, crime and rampant inequality are particular challenges. Moreover, the country's industry is relatively uncompetitive internationally: Manufacturing as a share of GDP has tumbled from over 30% in the late 1980s to around 10% today.

Brazil's economic outlook:

Following the divisive presidency of right-wing Bolsonaro, former President Lula was re-elected in late 2022. His government is likely to tread a fine line between increasing social support while maintaining a prudent fiscal stance. Our panelists are not overly optimistic on the outlook for the economy in the coming years and see GDP growth below the regional average, as current economic problems are likely to persist over our forecast horizon. Brazil is set to remain firmly stuck in the middle-income trap—along with much of the rest of the continent.

Brazil's economy in numbers:

Nominal GDP of USD 1,952 billion in 2022.

GDP per capita of USD 9,615 compared to the global average of USD 10,589.

Average real GDP growth of 0.7% over the last decade.

Economic structure:

In 2021, services accounted for 74% of overall GDP, manufacturing 10%, other industrial activity 9%, and agriculture 7%. Looking at GDP by expenditure, private consumption accounted for 61% of GDP in 2021, government consumption 19%, fixed investment 19%, and net exports 1%.

International trade:

In 2021, manufactured products made up 25% of total merchandise exports, mineral fuels 14%, food 35%, ores and metals 20% and agricultural raw materials 5%, with other categories accounting for 1% of the total. In the same period, manufactured products made up 76% of total merchandise imports, mineral fuels 14%, food 5%, ores and metals 4% and agricultural raw materials 1%, with other goods accounting for 0% of the total. Total exports were worth USD 340 billion in 2023, while total imports were USD 241 billion.