Chamelidevi Institute of

Management & Research

Presentation
on
Economy of brazil
Federative Republic of Brazil
Economy of brazil
sao paulo Brazilia

Four main cities

Rio de Janeiro Bihia
Christ the Redeemer (statue
History of Brazil

Following three centuries under the rule of Portugal,

Brazil became an independent nation in 1822. By far
the largest and most populous country in South
America, Brazil overcame more than half a century
of military intervention in the governance of the
country when in 1985 the military regime peacefully
ceded power to civilian rulers. Brazil continues to
pursue industrial and agricultural growth and
development of its interior. Exploiting vast natural
resources and a large labor pool, it is today South
America's leading economic power and a regional
leader.
OVERVIEW
 Location - Eastern South America,
bordering the Atlantic Ocean

 Area – 8,511,965 sq km

 Land boundaries - total: 14,691 km

border countries: Argentina 1,224 km, Bolivia 3,400 km, Colombia

1,643km, French Guiana 673 km, Guyana 1,119 km, Paraguay 1,290
km, Peru 1,560 km, Suriname 597 km, Uruguay 985 km, Venezuela
2,200 km

 Natural resources - bauxite, gold, iron ore, manganese, nickel,

phosphates, platinum, tin, uranium, petroleum, hydropower, timber.

 Land use - arable land: 6.96%

permanent crops: 0.9 ,, other: 92.15% (2001)
OVERVIEW

 Currency = Brazilian Real

Currency unit – Brazilian Real
(US$ 1=BRL 2.331)

 Fiscal Year = 01 January - 31 December

 Population = 191,601,284

 Literacy rate: 86.4%

 Irrigated land - 26,560 sq km (1998 est.)

 Age structure -
0-14 years: 26.1%
(male 24,789,495/female 23,842,715)
15-64 years: 67.9%
(male 62,669,392/female 63,719,631)
65 years and over: 6%
(male 4,549,552/female 6,542,009) (2005
est.)
 Population growth rate - 1.06% (2005 est.)

 Religions -Roman Catholic

 Languages – Portuguese (official), Spanish,

English,French.

 Literacy – 86.4% total population

Political and Government figure
 President: Luiz Inacio LULA DA SILVA (since 1
January 2003),

 Vice President: Jose ALENCAR (since 1 January

2003),

Government and Political Figures

 Conventional Name: Federative Republic of Brazil
 Government type: federative republic
 Capital: Brasilia
 Constitution: 5 October 1988
 Largest companies

Market
Revenue Profits Assets
World Value Headqu
Company Industry (billion (billio (billion
Rank (billion arters
$) n $) $)
$)
Oil & Gas
149.9
8 Petrobras Operatio 208.3 15.04 295.60 Rio de J
8 aneiro
ns
49 Vale Mining 43.23 14.26 84.70 171.39 Rio de J
aneiro
Osasco
192.6
81 Banco Br Banking 36.12 4.11 59.80 , 
adesco 5
Greater
São Paul
202.0 o
101 Banco do Banking 28.61 2.60 41.54 Brasília
Brasil 0
103 Banco Itaú Banking 28.97 2.05 167.06 28.22 São Paul
o

203 Unibanco Banking 15.29 1.94 84.04 27.37 São Paul

o

322 Eletrobrás Utilities 9.20 0.54 56.62 18.08 Rio de J

aneiro

514 Usiminas Materials 5.82 1.18 8.63 19.14 Belo Hor

izonte

Telecom
municatio
519 Oi 7.90 0.61 12.36 11.69 Rio de J
ns aneiro
Services

Porto
606 Gerdau Steel 11.03 0.63 12.39 8.13
Alegre
GDP
 Brazil's nominal GDP is currently around US$1.65tn. When
measured by purchasing-power parity (PPP), the economy of
Brazil ranks as the 9th largest in the world. Whatever criteria
are employed in measuring the size of national economies,
Brazil is always ranked amongst the ten largest economies in
the world. It is the 2nd largest economy in the Americas after
the United States and the 2nd largest in the developing world
after China.
 With a population of about 192 million people and a per capita
income of around US$8,600 per annum, Brazil has the largest
domestic market in Latin America.
 GDP
GDP and GDP per capita

YEAR GDP  GDP  PER CAPITA  PER CAPITA 

(billion R) (billion US$) (R$) (US$)

2008 2,900 1,650 15,240 8,594

2007 2,600 1,463 13,515 7,605

2006 2,466 1,116 12,995 6,092

2005 1,938 796 10,520 4,323

2004 1,895 604 10,433 3,326

2003 1,805 507 10,087 2,831

2002 1,796 459 10,179 2,604

2001 1,762 510 10,135 2,933

2000 1,739 602 10,152 3,516

GROWTH AND EMPLOYMENT
 Since World War II Brazil has shown a great
potential for continuous economic growth and
development. As mentioned above, this was
particularly evident in the 1960s and 1970s, when
average annual growth was 6% and 9% respectively.
In the so-called 'miracle' years between 1970 and
1974 the annual growth rate exceeded 10% per
annum. In recent years annual economic growth
has tended to be around 5% In 2008 .
 Unemployment rate:   9.3% (2007 est.)
 With a relatively young population Brazil has to
create millions of jobs every year to absorb the new
entrants in the employment market, particularly in
urban areas.
MONETARY POLICY

In the 1999 currency crisis, which led to a

dramatic depreciation of the Real, Brazil has
established an inflation-targeting policy
(Decree No. 3,088 of 21 June 1999) similar to
that used in the UK and other countries. The
National Monetary Council (CMN) has ultimate
responsibility for formulating and conducting
monetary policy. The CMN sets the inflation
targets and the main monetary policy goal,
and is responsible for coordinating monetary
and fiscal policies.
 Inflation
 Under the inflation-targeting framework, annual inflation
targets for the national Broad Consumer Price Index (IPCA)
are set by the National Monetary Council and announced
by the Minister of Finance. Monetary policy decisions are
based on inflation forecasts, dependent upon alternative
interest rate paths, and take into account the state of the
economy and the probable future development of
exogenous variables

 The inflation index used for the purpose of setting interest

rates is the IPCA . The inflation target after the 1999
currency crisis was initially quite high: 8% for the year
1999 and 6% for 2000. Since 2005 the target has been set
at 4.5% per year. A variation of 2 percentage points around
the target is permissible – so, for example, in 2009 the
rate of inflation needed to be kept between 2.5% and 6.5%.
 The annual rate of inflation fell year after year
between 2003 and 2006, but despite the positive
effects of the appreciation in value of the real it has
been increasing since 2007, caused partly by higher
food and oil prices. The IPCA increased in the 12
months to October 2008, reaching 6.4%. Although
the prices of tradable goods increased, those of non-
tradable goods, particularly services, increased more,
which according to COPOM indicates the influence of
domestic factors over inflationary dynamics.
 IPCA Índice Nacional de Preços ao Consumidor
. Amplo (Brazil)
 INFLATION

INFLATION

YEAR INFLATION - National Consumer Price

Index (INPC)

2008 5.90%

2007 4.46%

2006 3.14%

2005 5.05%

2004 6.13%

2003 10.38%
Source: Central Bank of Brazil
2002 14.74%
PUBLIC FINANCE AND FISCAL POLICY

 Brazil has undertaken major adjustments in its fiscal policy

since the 1997-98 currency crises in Asia and Russia. These
have included tightening control over current expenditure, a
fiscal 'pact' between the federal government, states and
municipalities, and measures to increase revenue, as well as
the continuation of institutional and structural reforms
aimed at greater fiscal discipline and stability in public
finances.
 Targets for public sector primary surpluses have been met,
and in September 2009 the primary surplus of the
consolidated public sector reached 2.21% of GDP, despite the
fall in revenue and the increase in spending in the last
quarter of 2008 and first half of 2009 due to the global
recession.
FOREIGN DIRECT INVESTMENT

YEAR INWARD  OUTWARD  OVERALL 

(billion US$) (billion US$) (billion US$)

2008 45.100 20.020 65.150

2007 34.585 7.067 41.652

2006 18.822 28.202 47.024

2005 15.066 5.517 20.583

2004 18.146 9.807 27.953

2003 13.103 0.249 10.352

2002 16.601 2.482 19.083

BALANCE OF PAYMENTS

 Throughout 2003-08 Brazil posted a surplus in its

balance of payments current account, contrasting
with the recurrent deficits in previous years.
However, after reaching 1.8% of GDP in 2004, the
surplus began to shrink, falling to just 0.1% of GDP
in 2007. The current account balance deteriorated
further in the first half of 2008, when a deficit of
US$17bn was posted, with the continued increase
in imports of goods and services not being
matched by the increase in exports.
 FOREIGN RESERVES
FOREIGN RESERVES

YEAR END US$bn

2009 230.000 (until November)

2008 193.783

2007 180.334

2006 85.839

2005 53.799

2004 52.935

2003 49.296

2002 37.823
Capital Markets

 Brazil has a highly developed capital market

which offers numerous investment
opportunities, along with a wide range of
services and products.
Brazil capital market indicies

 Ibovespa- Bovespa Index

 IBrX- Brazil Index (~100 companies)
 IBrX50- Brazil Index (50 companies)
 IBVX-2- Valor Bovespa Index (with Valor

Econômico newspaper)
 IEE (index)- Electric Power Index
 IGC (index)- Special Corporate Governance

Stock Index
 ITEL- Telecommunication Sector Index
B
R
I
C
 BRIC
Painting BRIC by numbers

 Russia
Categories  Brazil    India    China  
  
Area 5th 1st 7th 3rd/4th
Population 5th 9th 2nd 1st
Population gr 107th 221th 90th 156th
owth rate
Labour force 5th 6th 2nd 1st
GDP (nominal) 10th 8th 12th 3rd
GDP (PPP) 9th 6th 4th 2nd
GDP (nominal) 63rd 52nd 143rd 104th
per capita
GDP (PPP) per 77th 52nd 130th 100th
capita
GDP (real) gro 81st 69th 28th 16th
wth rate
 1
BRAZIL RUSSIA INDIA CHINA 
Human
Development
92nd
Index
75th 71st 34th
Exports 21st 11th 23rd 1st
Imports 27th 17th 16th 2nd
Current accou 47th 5th 169th 1st
nt balance
Received FDI 16th 12th 29th 5th

Foreign excha 7th 3rd 5th 1st

nge reserves
External debt 24th 20th 27th 19th
Public debt 47th 117th 29th 98th
Electricity con 10th 3rd 7th 2nd
sumption
  Brazil  Russia  India   China
Number of mo 5th 4th 2nd 1st
bile phones
Number of int 5th 11th 4th 1st
ernet users
Motor vehicle 6th 12th 9th 2nd
production
Military expen 14th 8th 9th 2nd
ditures
Active troops 14th 5th 3rd 1st
Cultivated lan 5th 4th 2nd 3rd
d
Forest area 2nd 1st 10th 5th
Waterways len 3rd 2nd 9th 1st
gth
Rail network 10th 2nd 4th 3rd
Road network 4th 8th 3rd 2nd
THANK YOU