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Por que Brasil?
Brazil is the seventh economy in the world with a Gross Domestic Product (GDP) of US$ 2.4 trillion amounting to nearly 50% of Latin American economy. Brazil has a large and fast growing consumer market, comprising 201 million people. From 2003 to 2012, real GDP increased by 41 percent, real total wages by 65 percent and domestic retail sales by 119 percent. It was a period of consolidation for the domestic market, based on income growth and social inclusion. It has a privileged location in the east-central part of South America, where it borders almost all other South American countries, allowing companies to easily access Latin American and African markets.
Some of the Country’s main competitive advantages are:
- Leading regional economy
- Secure investment framework
- Huge domestic market
- Global player
- Innovative hotbed
- World-class workforce
- Major infrastructure projects
- Energy and Agricultural powerhouse
- Gateway to Latin America
Stable economic growth with social sustainability
The accumulated GDP growth in the last 3 years was 11.1%, and the evolution pattern shows a trend of stable growth, with an annual average of 3.5% over a five years period (2010-2015). The government stimulus measures after the world crisis in 2008 have shown significant results, and have been strengthened further to increase GDP growth in upcoming years.
GDP average growth (%)
Source: IBGE. Produced by APEXBrasil. (*) Forecasts based on IIF
The solid Brazilian economic basis has led the country to a development cycle, with growth in Gross Domestic Product (GDP), robust foreign reserves, a stable financial system, and a sustainable labor market that ensures dynamic domestic demand and significant social gains. It is important to highlight the reduction in social inequality and unemployment rate – 20 million jobs were created from 2003 to 2013.
New formal jobs (in millions)
For 2012 and 2013, updates after the official release date were taken into consideration
* January to August 2013. Source: Ministry of Labor and Employment Produced by: Ministry of Finance
The external sector of the Brazilian economy has enjoyed a comfortable position for several years. The Central Bank currently has over US$ 378 billion in international reserves, which can be used to address any turbulence in the financial markets.
International Reserves ( in US$ billion)
Source: Brazilian Central Bank (BCB). Produced by: Ministry of Finance
Macroeconomic structure for a period of transformation
Macroeconomic policies adopted in Brazil in the past years have been overall effective. Since 2003, the Brazilian government has kept inflation relatively low, repurchased all sovereign debt originated in the 1990s, improved the risk profile of its government bonds and substantially increased the level of foreign reserves. Such measures have led to moderate impacts of the severe global financial crisis that began in 2008 on the Brazilian economy and have set the basis, alongside with other government policies, to a period of long-term transformation of the Brazilian economy and society.
In the last decade, Brazilian public debt/GDP ratio decreased significantly, going from 60.4% in 2002 to 35.1% in 2012. This path to fiscal soundness has been kept steady even in an environment of international financial crisis and the consequent adoption of countercyclical fiscal policies, such as tax cuts and the expansion of public investment.
Consolidated Public Sector Net Debt (as % of GDP)
Source: Brazilian Central Bank (BCB). Produced by: Ministry of Finance
Moreover, it is important to stress that such reduction in the public debt have occurred in accordance with fiscal responsibility principles and legislation. On a list of 100 countries, the International Budget Partnership had considered Brazil to be 12th most transparent nation.
Open Budget Index - 2012
Source: International Budget Partnership. Produced by: Ministry of Finance
Strong domestic market
Over the past five years, more than 26 million Brazilians overcame poverty and another 34 million reached the middle classes. The average income of the Brazilian population has been increasing since 2004, at the same time as inequality in income distribution has been decreasing.
Brazil has become a middle-class country. More than 50% of the population currently belongs to class C (middle income), with strong consumption potential. The wealthier classes (A and B) also saw rapid expansion, with cumulative growth of 80% in the last ten years.
Social Classes (millions of people)
* Forecasts: Baseline: 6.5% Income Growth Rate. Source: Ministry of Finance – December 2012
In 2020, Brazil will become the fifth largest consumer market in the world, with a forecast of US$1.8 trillion in household consumption and will be among the top three markets for automobiles and motorcycles, food and beverages, clothing and cosmetics.
Global consumer market in 2020 (US$ trillion)
Source: Exame Magazine and McKinsey. Produced by: Ministry of Finance
Increasing demand for infrastructure services
In the past years, the country´s demand for infrastructure services has increased sharply. The demand in the airline traffic, for instance, grew 182.5% from 2002 to 2012 (in millions passengers/year). In the same period, vehicles sales grew 153.5%.
Brazil is at the onset of a new investment cycle, based on concessions, private financing and the participation of banks and investment funds. In 2012, the Brazilian government launched the Logistics Investment Program, which will build up and modernize the country´s infrasctructure. It is one of the largest concession programs in the last decades, designed on the basis of a strategic partnership with the private sector and focused on the renewal and integration of the Brazilian transportation network.
The Brazilian government will promote concession auctions for large projects in innumerous segments, such as highways (7,500 km), railways (10,000 km), airports and ports. It is also programmed the concession auction for the operation of the first high-speed railway in Brazil. This program will build up and modernize the country´s infrasctructure.
Demand for Infrastructure Services – 2002-2012
Source: National Logistics & Planning Company (EPL), Energy Research Company (EPE) and Ministry of Mining and Energy (MME) and Credit Suísse. Produced by: Ministry of Finance
Several major infrastructure programs have been conducted by the Brazilian Government, with estimated investments of over US$239.9 billion for the coming years. Apart from these programs, a number of infrastructure projects are also under development for the 2014 World Cup and the 2016 Olympics.
Investments In Infrastructure in Coming Decades
Source: Credit Suisse Research, National Logistics & Planning Company (EPL), Energy Research Company (EPE) and Ministry of Mining and Energy (MME). Produced by: Ministry of Finance
Foreign trade - opening up markets
With a Gross Domestic Product (GDP) amounting to nearly 50% of Latin American economy, Brazil has been consolidating its position as an important platform for South American and Southern African markets. In 2012, the country reached a surplus of US$20 billion in its trade balance.
Market diversification has been one of the strategies to increase Brazilian exports. The share of exports to China grew in importance, with China becoming Brazil’s most important trade partner. The share of exports to Mercosur (excluding Venezuela) partners also increased, from 4.2% in 1990 to 9.4% in 2012. In this same year, Brazilian trade flow (exports plus imports) achieved US$ 465 billion, amount 4.3 times higher than the one registered in 2002 (US$ 107.7 billion).
Brazil: largest Trading Partners (%of total exports)
Data: % share of total exports *YTD October 2012 **Venezuela not included.
Source:MDIC. Produced by Ministry of Finance.
Brazilian trade flow - exports plus imports (in US$ billion)
* On a 12-month basis up to August 2013.Source: Ministry of Development, Industry and Foreign Trade (MDIC)
Produced by: Ministry of Finance
Abundant renewable and clean energy
Brazilian energy is abundant and diverse. The country is self-sufficient in oil and has several sources of clean energy, such as hydro, wind and ethanol. Today, 46% of the energy production in Brazil comes from renewable sources, out of which 76% from hydroelectricity.
Source: Brazilian Energy Review 2012
Foreign Direct Investment Top Destination
With a sound macroeconomic foundation, a steady-growing industry and a strong democracy, Brazil is currently one of the most attractive countries for foreign investors. It has received US$ 65 billion in foreign direct investment in 2012, becoming the fourth biggest FDI recipient in the world according UNCTAD. It offers a safe and outstanding investment environment, full of business opportunities. Foreign investors have security and legal permission to send profits to their home countries, and foreign capital is subject to the same legislation applied to domestic investments.
Foreign Direct Investment Top Destination
Source: United Nations Conference on Trade and Development (UNCTAD). Produced by: Ministry of Finance
Reduced costs for investment
The Government has put in place several measures aiming to reduce investment costs, among which the following stand out:
Source: Economic Outlook, Brazilian Ministry of Finance, 2013
- Leader in clean renewable energy
- Home to the world´s largest biodiversity
- A global reference in the production of biofuels
- Host to the 2014 World Cup and the 2016 Olympics
- 2nd largest market for ATMs
- 3rd main market for biodiesel
- 3rd largest market for personal computers and for beauty & healthcare products
- 3rd main aircraft producer and top producer of models seating up to 120 passengers
- 4th largest market for cell phones, automobiles and TV sets
- 5th largest market for medical equipment
- 10th largest industrial producer
- 13th largest producer of scientific articles
- Average of 12,000 PhD and 41,000 Master degrees granted annually from Brazilian universities
- Home to the world’s 15th largest oil reserves
- 75,000 new government scholarships for Brazilians to study abroad to be granted by 2015
- 60% of all R&D investment in Latin America is allocated in Brazil
- 161 tech parks in operation
- 88.8% of the Brazilian electricity energy matrix is renewable
What is Renai?
The Brazilian Investment Information Network (RENAI) is part of the Ministry of Development, Industry and Foreign Trade. It works in close cooperation with state governments across Brazil. Its main objective is to provide information about government programs, legislation and projects to local and foreign investors.
RENAI has three primary objectives:
a) Introduce and clarify government programs, regulations and projects to potential investors and established companies in Brazil;
b) Address private sector demands to the federal and state governments in order to improve the business climate through policy improvements and adjustments; and
c) Stimulate and assist state governments to foster investments in Brazil as a pathway to economic and social development.
To achieve its objectives, RENAI operates an extensive online database of government investment projects across Brazil which encompasses federal, state and municipal initiatives such as concessions and Public-Private Partnerships (PPPs).
RENAI also organizes workshops and seminars in Brazil to disseminate a culture of investment attraction in the country. The RENAI team systematically and continuously surveys announced investment projects and makes them available in an online database. It provides detailed information about these investments according to company, state and economic sector.
It also takes part in international investment agreement negotiations and is responsible for organizing investment missions abroad for the Minister of Development, Industry and Foreign Trade, as well as for hosting investors wishing to negotiate directly with the Brazilian government.
RENAI, in conjunction with several secretariats within the Ministry of Development, Industry and Foreign Trade, also aims to identify supply-chain gaps to foster foreign investment attraction campaigns carried out by Apex-Brasil and other federal entities.
To learn more about RENAI, please access its website: www.mdic.gov.br/renai
Apex-Brasil´s services to help you do business with Brazil
Apex-Brasil promotes investment opportunities to attract foreign investors to Brazil. The Agency focuses on companies and projects that offer technological innovations and new business models, strengthen industrial supply chains, have a direct impact on national job creation and improve the volume and diversity of Brazilian exports.
The Agency is prepared to assist in all steps of the investor’s decision-making process. Her service portfolio ranges from identifying and contacting potential investors for a particular industry segment to supporting a future investor in its understanding of Brazil. APEX-Brazil prepare analysis covering industry sectors and markets, economic trends, and general guidelines on legal and fiscal matters, and provide information on input costs, suitable locations and talent pool availability. Using an extensive network of companies, associations and authorities, Apex-Brasil also acts as liaison between potential partners, key suppliers and regulatory and local authorities.
The current priority sectors are:
· Aerospace and Defense
· Environmental Solutions (includes renewable energy)
· Life Sciences
· Oil and Gas
· Real Estate
· Research and Development
· Semiconductors and Displays
The Agency also supports foreign investors willing to identify local companies, universities and research centers to establish partnerships, joint-ventures or other types of collaboration. Moreover, Apex-Brasil can help capital investors and in the process of identifying opportunities, projects and companies for venture capital and private equity investments in the country.
Apex-Brasil has assisted investors and industries from numerous countries in setting up new facilities, and has played a key role in directing investments to Brazil.
To do business in a great country, you need a great partner. Apex-Brasil.
 Source: Brazilian Institute of Geography and Statistics -IBGE.