Brazil Economy, GDP, Budget, Industry and Agriculture


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Brazil Economy

View the information below regarding the economy of Brazil. The summary and statistics contains gdp, industry, agriculture and more for Brazil. If you need other information please visit the Brazil Country Page.

  • Brazil Government
  • Brazil People
  • Brazil Geography
  • Brazil History

    Economy (2002)
    GDP: $499.4 billion.
    Annual real growth rate: 1.5%.
    Per capita GDP: $2,820.
    Natural resources: Iron ore, manganese, bauxite, nickel, uranium, gemstones, oil, wood, and aluminum. Brazil has 12% of the world's fresh water.
    Agriculture (9% of GDP): Products--coffee, soybeans, sugarcane, cocoa, rice, livestock, corn, oranges, cotton, wheat, and tobacco.
    Industry (32% of GDP): Types--steel, commercial aircraft, chemicals, petrochemicals, footwear, machinery, motors, vehicles, auto parts, consumer durables, cement, and lumber.
    Services (59% of GDP): Types--mail, telecommunications, banking, energy, commerce, and computing.
    Trade: Trade balance 2002--$13.1 billion surplus. Exports--$60.3 billion. Major markets--United States 25.4%, European Union 24.9%, China 4.2%, Argentina, Mexico, and Japan, all 3.9%. Imports--$47.2 billion. Major suppliers--European Union 27.6%, United States 26%, Argentina 10%, Japan 5%, and China 3.3%.

    Brazil Economy
    Brazil's projected GDP for 2003 is $508.4 (2.3% growth), 2002 was estimated at $499.4 (1.5% growth), 2001 was $503.9 billion (1.7% growth), and 2000 was $594.2 billion (4.5% growth). (Above growth is measured in year-end U.S.$ equivalency.) For perspective, the Brazilian real weakened from an average exchange of $1.83 real/dollar in 2000 to $2.92 real/dollar in 2002. Brazil's economy is highly diversified with wide variations in levels of development. Most large industry is concentrated in the south and southeast. The northeast is the poorest part of Brazil, but it is beginning to attract new investment.

    The economy was under critical stress in 2002 with election uncertainties, the 35% depreciation of the real, less foreign direct investment (dropping to $16.6 billion, 6 billion less than the previous year's total), and speculation that Brazil might go the way of Argentina. Public debt briefly rose to 63% of GDP, 11% above the 2001 year-end level. Brazil was helped by the IMF, which stepped in with a record $30 billion program. Lula's incoming government further slashed spending and increased its primary budget surplus target from 3.75% to 4.25% of GDP, going beyond the letter of the IMF agreement.

    The Government of Brazil has given other positive signals to the international financial community. In early April 2003, a bill to pave the way for operational autonomy of the Central Bank passed in Congress by a margin of 442 to 13. Later that month, President Lula met with the 27 state governors and gained a consensus on tax and pension reforms bills. His next challenge is to convince Congress.

    Passage of Brazil's Fiscal Responsibility Law in May 2000 improved fiscal discipline at all levels--federal, state, and municipal--and in all branches of government. The government's latest proposals for addressing the huge budget deficits incurred by Brazil's pension system include a sharply lower ceiling on public-sector pensions. Currently, the public sector employees receive a pension equal to their top lifetime salary. Thus, in 2002, three million public-sector pensioners accounted for 75% of the system's total deficit of 4.2% of GDP. Tax reform has been a carryover from the prior administration. Among tax reform proposals, President Lula proposes to unify the ICMS tax on goods and services into a standardized national VAT with five different rates. Currently, there are dozens of different rates levied in the 27 states, all of which have their own tax code. Success for both pension and tax reform will require a constitutional amendment, which in turn needs approval by 60% of each chamber of the legislature in two successive votes.

    Market opening and economic stabilization have significantly enhanced Brazil's growth prospects. Brazil's exports have nearly doubled in the last decade, and imports have more than doubled. Once opposed to the FTAA, Lula and the PT have moderated their stance. As co-chairs of the FTAA talks since November 2002, the United States and Brazil have worked constructively together. Common goals such as global elimination of export subsidies and reduction in domestic agricultural support can enhance this partnership. Brazil has much to gain through free trade in terms of economic growth and realizing its trade potential.

    Brazil has vast agricultural resources, with two distinct agricultural environments. The first, comprised of the southern one-half to two-thirds of the country, has a semi-temperate climate and higher rainfall, better soils, higher technology and input use, adequate infrastructure, and more experienced farmers. It produces most of Brazil's grains and oilseeds and export crops. The other, located in the drought-ridden northeast region and in the Amazon basin, lacks well-distributed rainfall, good soil, adequate infrastructure, and sufficient development capital. Although producing mostly for self-sufficiency, the latter regions are increasingly important to exporters of forest products, cocoa, and tropical fruits. The Central-West contains substantial areas of savannah grassland with only scattered trees, and the area is experiencing rapid and extensive agricultural expansion.

    Brazilian agriculture is well diversified, and the country is largely self-sufficient in food. Agriculture accounts for 9% of the country's GDP and employs about 20% of the labor force. Agribusiness, taken as a whole, accounts for about one-third of Brazil's GDP. Brazil is the world's largest producer of sugarcane, coffee, frozen concentrated orange juice, tropical fruits, and has the world's largest commercial cattle inventory. It is a major producer and exporter of cocoa, soybeans, tobacco, wood products, poultry, pork, corn, cotton, and tobacco. Livestock production is important in many sections of the country, with rapid growth in the poultry, pork, and milk industries reflecting changes in consumers' tastes. Agriculture accounts for about 41% of the country's exports, and Brazil enjoyed a positive balance of trade of more than U.S. $20 billion in agriculture in 2002.

    Forests cover half of Brazil, with the largest rain forest in the world located in the Amazon Basin. Recent migrations into the Amazon and largescale burning of forest areas have brought international attention. The government has reduced incentives for such activity and is implementing an ambitious environmental plan that includes an Environmental Crimes Law with serious penalties for infractions.

    Brazil has one of the most advanced industrial sectors in Latin America. Accounting for nearly one-third of GDP, Brazil's diverse industries range from automobiles and parts, other machinery and equipment, steel, textiles, shoes, cement, lumber, iron ore, tin, and petrochemicals, to computers, aircraft, and consumer durables. General Motors, Ford, and Fiat have established small-car production facilities in Brazil. Automakers look to test new production methods in Brazil, since the industry is more flexible than the more mature industries in Europe.

    Brazil has a diverse and sophisticated services industry as well. Mail and telecommunications are the largest, followed by banking, energy, commerce, and computing. During the 1990s, Brazil's financial services industry underwent a major overhaul and is relatively sound. The financial sector provides local firms a wide range of financial products. The largest financial firms are Brazilian (and the two largest banks are government-owned), but U.S. and other foreign firms have an important share of the market.

    Privatization triggered a flood of investors after 1996. The yearly investment average in the telecom sector the 4 years prior to the start of privatization was R$5.8 billion, and the annual average for the 4 years post privatization was R$16.3 billion, nearly tripling. Investment in the electrical power sector increased from R$5.3 billion annually in the pre-privatization era to R$7.2. U.S. companies provided a great deal of this influx of cash. After 2000, many of these investors suffered huge losses in the face of adverse regulatory decisions, the plunge of the real. The energy sector was especially hard hit.

    In 2001, Brazil experienced an electricity crisis due to inadequate rainfall for its hydroelectric system and insufficient new investment in the sector. Mandatory rationing and price hikes were sufficient to prevent blackouts. The rationing system officially ended on March 1, 2002. The Energy Minister will unveil an energy plan in July 2003, which will be critical in determining future investor interest.

    The Government of Brazil has undertaken an ambitious program to reduce dependence on imported oil. In the mid-1980s, imports accounted for more than 70% of Brazil's oil and derivatives needs; the figure is now 19%. Brazil is one of the world's leading producers of hydroelectric power. Of its total installed electricity-generation capacity of 90,000 megawatts, hydropower accounts for 66,000, i.e., 74%.

    Proven mineral resources are extensive. Large iron and manganese reserves are important sources of industrial raw materials and export earnings. Deposits of nickel, tin, chromite, bauxite, beryllium, copper, lead, tungsten, zinc, gold, and other minerals are exploited. High-quality coking-grade coal required in the steel industry is in short supply.


  • Brazil Government
  • Brazil People
  • Brazil Geography
  • Brazil History