Overall

The Economy of Brazil in 2023 - Industry & Market Trends

Last Updated: October 30, 2023
bra

Population

211 million

GDP

1.92 trillion

GDP Growth Rate

2.9 %

GDP Per Capita

9455 USD

Land Size

8358140 km²

TFR

1.7 Child

Unemployment Rate

9.3 %

Inflation Rate

9.3 %

What is The Overall Outlook in Brazil ?

Brazil is the largest country in South America, with a population of over 214 million, making it the fifth largest in terms of area and the sixth largest in terms of population in the world. Brazil has a diverse landscape, and its lush forested areas are famous, including the Amazon rainforest in the north, which is the largest in the world, with the country possessing about 60% of the Amazon. However, in recent years, these forests are gradually shrinking. According to data from the Brazilian National Institute of Space Research, as of two months before 2022, the area of deforestation in the Amazon region had reached 430 square kilometers, more than double the average level of the past decade.

In addition to supporting its GDP through industries such as rubber and timber, Brazil is also the world’s largest exporter of beef and soybeans. This dependence on exports has led to illegal deforestation and even suspected intentional ignition of wildfires to create more pastures and farms.

Like other South American countries, Brazil was colonized by other countries until its independence in 1822. The only difference is that its colonial power was the Portuguese Empire, while most other South American regions were colonized by Spain. From independence until 1985, the country underwent several centuries of populist and military government rule, before adopting a constitution in 1988 and defining itself as a democratic federal republic. Following this, Brazil benefited from the transfer of industrial activities to low-cost countries in the 1990s, and also attracted engineers and technical personnel with technical skills. With foreign investment, better education, and increased domestic consumption, Brazil became an important participant in the global economy, and was seen as one of the world’s fastest-growing emerging markets and a contributor to global growth.

Such strong growth saw Brazil, along with Russia, India, China, and South Africa, referred to as the BRICS, which are emerging economies with extremely fast economic growth, and by 2050 it was expected to surpass developed economies. However, the economic performance of the past decade showed that Brazil no longer belongs to the BRICS. The country, once one of the fastest-growing economies in the world, has been in a state of severe decline due to long-term corruption, political turmoil, and poor management. Just in 2015 and 2016, this led to a contraction in GDP of nearly 7%.

With the global inflation rate rising, Brazil, which is export-oriented with commodities, has seen an improvement in its economic outlook due to the rise in prices of agricultural products and raw materials. At the same time, as an oil-exporting country, it has benefited from the continuously rising prices of oil and energy, leading to a new high in exports, and foreign investment is expected to increase. However, this is not entirely good news, as families’ actual incomes will be eroded by rising inflation, and although the central bank has increased the interest rate from 2.0% in 2020 to 11.75% to curb inflation, it is very likely that the central bank will further raise interest rates in the future, which means that Brazil may once again face the challenge of entering a contraction, and even growth may freeze in 2023.

The recent investigations into the insurrection by extremist supporters of former president Jair Bolsonaro presents challenges for the new president Luiz Inácio Lula da Silva as he begins his term. The Economic Intelligence Unit (EIU) predicts that Lula will form a broad coalition in congress for support, but he will face strong opposition from right-wing parties. Lula’s policies are expected to be more fiscally expansionary and less market-oriented compared to Bolsonaro’s policies. Reforms to sales taxes and the income tax code will be a priority in the first year. The aim to increase social spending will result in a new fiscal framework, leading to a public debt/GDP ratio above 85% by 2026.

Brazil - Real GDP Growth
Note: Real GDP Growth (%) | Forecast After 2023 (IMF)
Intro
About OOSGA

OOSGA is a Taiwan-based company specializing in providing market strategy services for businesses. We are dedicated to offering our clients reliable market intelligence and insights and work alongside them through our project teams to enter & grow in new markets.

If you are considering entering a new market or thinking of expanding your business, please feel free to contact our team for a discussion at any time

Economic Structure

The latest GDP update was in October 2023, updating the data on the contribution of GDP output in various sectors for the year 2022, as a proportion of the total GDP. The data is sourced from the World Bank, IMF, and local government statistics. Predictions on the sources of GDP contribution are from the EIU.

Private Consumption
63.1%
Gov Expenditure
18%
Capital Formation
18.8%
Export
20.1%
Import
19.3%
Economic Growth(By Type)
Note: Real GDP Growth (%) | Forecast After 2023 (EIU)

Overall Economic Outlook in Brazil?

The global economy is slowing down, particularly in the US and Europe, and Brazil’s real GDP growth is expected to decelerate from an estimated 2.8% in 2022 to 1% (IMF) in 2023 due to global slowdown, elevated domestic interest rates, and high inflation. The negative effect on growth will be partially offset by a modest recovery in private investment once election-related uncertainty eases. However, if the Lula government’s interventionist policies weaken the business environment more than expected, growth will come in below forecast.

Agriculture and mining exports are expected to rise with a post-pandemic recovery in global demand, while manufacturing has already rebounded due to stimulus for consumers and a weaker currency. Services will grow more modestly following consumption trends. If the Lula administration restores confidence in the fiscal framework, which is the assumption made by many institutions, growth is expected to rise to an average of 1.7-2% annually in 2024-2027.

Population

211 million

Land Size

8358140 km²

GDP

1.92 trillion

GDP Per Capita

9455 USD

Unemployment

9.3 %

Inflation

9.3 %

Urbanization

86.8 %

TFR

1.7 Child

GDP Per Capita
Note: Real Growth (%) | Forecast After 2023 (IMF)
GDP Per Capita (PPP)
Note: Real Growth (%) | Forecast After 2023 (IMF)
Unemployment Rate
Note: %
Inflation Rate
Note: %

Other Economies

Industry Structure

The latest GDP update was in October 2023, updating the data on the contribution of GDP output in various sectors for the year 2022, as a proportion of the total GDP. The data is sourced from the World Bank, IMF, and local government statistics. Predictions on the sources of GDP contribution are from the EIU.

Agriculture
7.7%
Industry
20.9%
Manufacturing
11.1%
Service
71.9%
Economic Growth(By Sector)
Note: Real GDP Growth (%) | Forecast After 2023 (EIU)

Demographics Overview

Population +

977 k people

Birth

2723 k people

Death

1752 k people

Net Migration

6 k people

Brazil - Population Growth Drivers
Note: % | forecast after 2023
Brazil - Age Structure - Historical & Forecast
Note: % | forecast after 2023

Natural Growth

4.5 ‰

Net Migration

0 ‰

Young Dependency

29.4 %

Old Dependency

14.3 %

Brazil - Median Age
Note: Age
Brazil - Demographic Structure
Source: UN Population; OOSGA Analytics

Political Overveiw

In 1988, Brazil adopted a new constitution after over two decades of military rule. The government of Fernando Henrique Cardoso (1995-2002) brought an end to hyperinflation and implemented reforms to liberalize the economy. During the presidency of Luiz Inácio Lula da Silva (2003-10), Brazil saw the benefits of these reforms and experienced a consumer-driven boom fueled by commodities. However, this ended and led to unrest due to a weak economy, corruption, and inadequate public services. Lula’s successor, Dilma Rousseff, won a second term in 2014 but was impeached in 2016 for budget irregularities. Her vice president, Michel Temer, completed her term. Jair Bolsonaro won the 2018 election, but lost to Lula in the 2022 second-round run-off election, and Lula took office as president on January 1st, 2023.

Brazil’s political system consists of a president who carries out policies approved by the Chamber of Deputies, the lower house, and the Senate, the upper house. The judiciary conducts constitutional review and has independence. The president can use temporary decrees to pass legislation, but the constitution provides Congress with ample power to check the executive. The lower house has representation from 30 political parties and has a history of weak party discipline.

The benefits and entitlements established under the 1988 constitution have resulted in a doubling of central government primary spending to over 27% of GDP. In 2016, Congress passed a federal spending cap and in 2019, a robust pension reform was passed. The central bank, Banco Central do Brasil, started a rapid normalization cycle in March, raising the policy rate to its current 13.75%. The government reduced emergency coronavirus spending to less than 1% of GDP in 2022, but fiscal consolidation is progressing slowly. The public debt to GDP ratio was 76.8% in October 2022 and the fiscal deficit was 4.2% of GDP.

Brazil - Government Spending (% of GDP)
Note: (%)|2023後為預測(IMF)

Current Account Balance

-53.62 Billion

Current Account Balance (% of GDP)

-2.8 %

Gov Net Landing/Borrowing(% of GDP)

-3.1 %

Gov Gross Debt(% of GDP)

85.3 %

Brazil - Current Account Balance
note: (% of GDP) | Forecast After 2023
Brazil - Gross Debt
note: (% of GDP) | Forecast After 2023

Consumer Brief

We have consolidated data on Brazil’s e-commerce, social media, and insights relate to how customers in Brazil make decisions and spend.

Social Media Development, User Demographics, Platforms, and Trends in Brazil

Social Media Development, User Demographics, Platforms, and Trends in Brazil

Reference
  • Economic Data:OECD, World Bank, IMF、Government Statistics Bureau
  • Currency Exchange:Based on IMF data in 2023/1
  • GDP Growth Projection:OECD、IMF, OECD, EIU、Government Bureau
  • Demographics:UN Population Database
  • Race, Culture, and Languages:CIA Factbook
  • Unemployment Rate Projection:ILO, UNECE
  • Trade:UN Comtrade, UNCTD
  • ICT Infrastructure:ITU
  • Data Calculation & Regression:OOSGA.org
  • Analysis:OOSGA Analytics
  •  
Author: Economic Team, CR Team

We track the latest economic developments from spending, retail, real estate to demographics in major economics around the world.

Connect With Authors
*Your message will be sent straight to the team/individual responsible for the article.