Brazil – Potential Well Beyond World Cup

As most readers know, Brazil has been making news as the host for the World Cup football matches. But perhaps what is not as known is the news Brazil has been making over the past several years as one of the founding members of the BRICS; the leading group of emerging market countries. Originally, BRICS was just properly known as BIC, that is Brazil, India, and China. Russia and South Africa were added much later. And while Russia’s outlook in the short-term looks bad, India has experienced significant cooling, Brazil is expected to have solid growth for at least the next decade. As with Australia, Brazil experienced an agricultural and mining boom. To reduce dependence on foreign oil imports and lacking significant petroleum reserves of its own except in recently discovered offshore deposits, the government of Brazil has been subsidizing businesses to produce ethanol for the past several years. Brazil has a population of 200 million and a GDP of $2.4 trillion – making it the eighth largest economy in the world. With a growing middle class and a per capita income of $12,000, and a large service sector that suggests a strong consumer market, the prospects for Brazil look good over the next few years. Brazil represents a good target for exports, offers a good selection of imports, and if your business is looking to expand into the western hemisphere or the Latin American marketplace, Brazil could be a good location set up operations. Furthermore, with the recently discovered massive offshore oil deposits, Brazil could well be an oil exporter adding to further growth.

This is not at all to suggest Brazil does not face challenges. Current regulations and policies are not fully favorable for business environs, and recently the government policy trends have shifted towards more restrictive. Indeed of all the Latin American countries, Brazil actually ranks low, in the bottom third. There is still a massive wealth gap, in spite the growing middle class, with many urban dwellers living in the so called and well known favelas, areas of both poverty and high crime. Corruption remains a problem in Brazil, despite efforts by various past Brazilian governments to fight it. While fight against top level corruption has made some progress, there remains significant problems with corruption at local government levels. Both the current business policies and the widespread corruption present limits and barriers to Brazil’s growth. Still, as a marketplace, Brazil should be a consideration for exports if your business is considering getting into exporting or already does exports.

Leave a Reply