Brazil’s population is 189,600,000 inhabitants of which 70,000,000 belong to classes A-B. Economic and social changes are leading the remaining nearly 120 million to have increased access to higher purchase power, turning Brazil into a very attractive market in terms of percentage growth of domestic consumption of any kind of product. It is also important to understand that “the continent Brazil” is divided in states (26 + Federal District) with different legislations and opportunities, and this is why when one talks about Brazil it is as if one were talking about 26 different countries, each with its own economic features but also with its own specific problems. Another important aspect is the composition of Brazil’s population since historically the country was populated by immigrants, concentrated especially in the mid-south regions. Portuguese, German, Polish, Japanese, Ukrainian, Italian descendants constitute Brazil’s strength, favoring commercial contacts even more than with other BRIC, countries where cultural differences are greater.
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Area
At 8.5 million square kilometers, Brazil is 2.2 times the size of the European Union considering its 25 integrating countries, and 28 times the size of Italy. It is the 5th largest country in the world.
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Capital
Brasilia with 2.6 million inhabitants (official estimate of 2012).
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Geographic Regions
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Brazil is a federative republic composed of 26 states and the Federal District. According to its industrial and economic development, the country can be divided into 4 major regions:
- North/Northeast: A tropical region with hot climate, not much developed in economic terms. The largest urban centers are concentrated at the coast (Salvador; Recife; Natal; Fortaleza and Belem).
- Amazonas An extensive area encompassing several states, having Manaus as its economic center. It is an eco-environmental reserve.
- Central/Midwest: Largely industrialized it is rich in raw materials and minerals and has extensive agricultural areas. The main states are: Minas Gerais (capital: Belo Horizonte) where the Vale do Rio Doce company (ore) has its major facilities and production plants, as well as several other multinational companies among which is FIAT; Mato Grosso (capital: Cuiaba) where agriculture and animal farming is highly developed; and Rio de Janeiro (capital: Rio de Janeiro) where Petrobras, and other large companies have their headquarters.
- South/Southeast: The wealthiest and most developed part of the country, constituting Brazil’s economic heart; it accounts for 70% of the Brazilian GDP. The states that are part of this region are São Paulo (capital: São Paulo); Mato Grosso do Sul (capital Campo Grande); Paraná (capital: Curitiba); Santa Catarina (capital: Florianópolis) and Rio Grande do Sul (capital: Porto Alegre). Highly industrialized and encompassing a variety of productive sectors the area is considered the flagship of Brazilian economy.
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Major cities (official estimate of 2012)
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- São Paulo: 11.376.685 inhabitants;
- Rio de Janeiro: 6.390.290 inhabitants;
- Salvador: 2.710.968 inhabitants;
- Brasília: 2.648.532 inhabitants;
- Fortaleza: 2.500.194 inhabitants;
- Belo Horizonte: 2.395.785 inhabitants;
- Manaus: 1.861.838 inhabitants;
- Curitiba: 1.776.761 inhabitants;
- Recife: 1.555.039 inhabitants;
- Porto Alegre: 1.416.714 inhabitants.
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Population
Brazil has a population of 194 million inhabitants, and is considered a country with a young population. Three quarters of the country’s inhabitants live in cities, and there are 14 cities with more than one million inhabitants.
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Climate
Tropical and subtropical. Moderate at the meridional coastal area and higher altitude areas.
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Language
Portuguese
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Religion
Seventy percent of the Brazilians are of catholic faith; 19% are Protestants and the rest of the populations have other religions.
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Currency
Brazil’s legal tender unit is the Real (BRL, R$).
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Productive Sectors
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Its abundant natural resources place Brazil in a competitive advantage position regarding farming products and raw materials development, including iron and steel production. Among the major farming products are soy, sugar cane, orange, tobacco, cocoa, coffee, meat and poultry. The strength of the agri-food sector is closely connected to the development of the existing relationship between the food industry and the agricultural sector. Brazil has a solid and diversified industrial foundation ranging from heavy engineering to consumer goods, concentrated mainly at the southeastern region, in the states of São Paulo, Rio de Janeiro and Minas Gerais.
The Southeastern region, one of Brazil’s five “macro regions” (Southeast, South, North, Northeast, Mideast) represents the driving force from the economic standpoint, and is constituted by the states of Espírito Santo, Minas Gerais, Rio de Janeiro and São Paulo. At those states half of the Brazilian GDP is produced. The Midwestern region, in turn, is the country’s fastest growing area. It includes the Federal District (Brasília), Goiás, Mato Grosso and Mato Grosso do Sul.
However, it is the state of São Paulo that drives the country’s industrial and manufacture production, even though at present its participation in the GDP may be dropping. In the past few years, several industrial activities developed in the states of Minas Gerais (automobiles, steel); Bahia (petrochemicals, paper and shoe industries); Paraná (automobiles); Pará (mine ore and aluminum); Rio Grande do Sul (petrochemicals) and Espírito Santo (steel). The opening of trade in the past few years has brought more benefits to those states than to São Paulo. Also, the state of Rio de Janeiro has lately registered a constant growth, in part because of the oil industry growth. Petrobras, world leader in producing and exploring oil in deep waters is headquartered in Rio de Janeiro.
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Perspectives for the Future
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The Brazilian economy is struggling against the global crisis that, in global times like ours, spares no one. All of its indicators are positive, although some warning signs and lights go on and start flashing. Gross domestic product (GDP) will also continue to grow in the coming years and inflation will be, to a certain extent, under control (5.7% in 2012). On the other hand, however, the decrease in the total industrial production is a reason for concern (-3% over the year), thus evidencing a loss of market due to its low efficiency.
Brazil has always been a giant as a supplier of raw materials, but a dwarf as to the processing thereof. Trade and services, which are the most remarkable components of GDP, are growing and are the real accelerators of the economy. The continuous tax maneuvers (exemptions) in order to increase consumption help trade development and credit growth feeds it back. Consensus has it that when a country grows, the first indicator is that of building sector, "if building goes forward, the country also follows its flow."
Currently Brazil is an open construction site: a variety of works can be found everywhere, from popular to luxury homes; from federal infrastructures, such as maritime ports, airports, roads and railways, to state ones, such as hospitals, schools and subways. Not to mention the works for the 2014 World Cup Championship and the 2016 Olympic Games, to be hosted in Rio de Janeiro. Therefore, Brazil is experiencing both infrastructural and real estate explosion, combined with consumption growth and low unemployment rate (4.9% or 1.2 million). Governing all this is a huge task that requires expertise and planning. Political stability rediscovered over the last decade suggests that Brazil has the conditions required to overcome this challenge. Time will tell.
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Brazil Selected Economic Indicators
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GDP (Gross domestic product): R$ 4,143 trillion or U$ 2,367 trillion* - (2011)
* Exchange rate on 06.03.2012 USDBRL = 1,75
GDP per capita: R$ 21.252 or U$ 12.144* - (2011)
GDP evolution: 2,7% (2002); 1,1% (2003); 5,7% (2004); 3,2% (2005); 4 % (2006); 6,1% (2007); 5,2% (2008); - 0,3% (2009); 7,5% (2010); 2,7% (2011).
GDP Growth: 1% (2012)
Investment rate: 19,3% of GDP (2011)
Savings rate: 17,2% of GDP (2011)
Labor force: 104 million ( 2011)
Inflation (IPCA): 6,5% ( 2011) 5,7% (2012)
Unemployment rate: 5,8% (may, 2012)
Central Bank of Brazil basic interest rate (SELIC): 7,25% per year (December, 2012)
National minimum wage: R$ 622,00 (2012) U$ 674,00 (estimation 2013)
External debt: US$ 297 billion (2011)
Exports: US$ 256,041 billion (2011)
Imports: US$ 226,251 billion (2011)
Balance of trade (2011): US$ 29,790 billion (superavit) –Growth of 47,8% (compared with 2010)
