Economy Of Brazil

From A “Basket Case” To Being Solid As A BRIC

Brazil today is at the forefront of emerging issues in the global economy. Despite the global economic slump, FDI in Brazil still grew 30% in 2008, reflecting foreign investors’ confidence in the country. Economists have predicted that the economy may expand 7.5% this year, up from a previous forecast of 7%. It is the largest economy in South America and the country boasts well developed mining, agriculture, manufacturing and established service sectors.

That said Brazil’s economy has not escaped the crisis unscathed. Their national debt is over R$1 trillion, which is an all-time high. Brazil is also faced with poor infrastructure, income concentration, inferior public services, corruption, and government bureaucracy. The country is faced with a grave tax burden, skewed distribution of income and arduous regulations for the private business sector. However, the strong growth and high interest rates make it an attractive destination for foreign investors. The pace of growth eased from earlier this year, an indication that interest-rate hikes are working.

Economy of Brazil had weaknesses but blessed with abundant natural resources. The country has many different soils and climates, so it can produce a great variety of crops. Its agricultural exports include sugarcane, latex coffee, cocoa, beans, cotton, soybeans, rice, and tropical fruits. Brazil is also South America’s most industrial nation, producing chemicals, steel, iron ore, aircrafts and cars. Their main trading partners are the United States, Argentina, China, Netherlands, and Germany.

Brazil’s economy is booming. Its $1.3 trillion economy is bigger than those of India and Russia, and its per-capita income is nearly twice that of China. The outlook for the Brazilian economy is positive. The economic freedom score of the country is 56.3, making its economy the 113th freest in the 2011. Now, this is 0.7 better than the previous year. The government has initiated the Growth Acceleration Program (PAC) is an ambitious infrastructure development program to address the country’s road, rail, energy and other infrastructure needs.

Economists say that Brazil is finally poised to realize its potential as a global player. Brazil along with three other countries (Russia, India and China) are believed to among the four most dominant economies. They are collectively known as the “Big Four” or the “BRIC’s.”

Also read the historical chapter on Capitalism and Underdevelopment in Brazil.

Facts on Brazil