Brazil Market

Brazil, officially known as the Federative Republic of Brazil, or “Republica Federativa do Brasil ” in Portuguese is the largest as well as the most populous country in the South American continent. Brazil Market is a free market economy organized along capitalist lines. Measured in Purchasing Power Parity (PPP) as of 2006, the Brazilian economy is the ninth-largest in the world and is the largest in South America with the Gross Domestic Product (GDP) aggregating to US $ 1.813 trillion.

Brazil, officially known as the Federative Republic of Brazil, or “Republica Federativa do Brasil ” in Portuguese is the largest as well as the most populous country in the South American continent. Brazil Market is a free market economy organized along capitalist lines. Measured in Purchasing Power Parity (PPP) as of 2006, the Brazilian economy is the ninth-largest in the world and is the largest in South America with the Gross Domestic Product (GDP) aggregating to US $ 1.813 trillion. The Brazilian economy can now be characterized as a mostly technology driven economy which has experienced tremendous growth in the last few years since the process of industrialization started in the 1930’s. This growth has mainly been export-driven. According to government released statistics, Brazil was the first country with a capitalist structure in the world to accommodate the ten largest car assembly companies within its territorial boundaries. Brazil is part of the BRIC (Brazil, Russia, India and China) group of countries and is perceived to a potential economic superpower which would eclipse the present major economies in the future.

In this regard, some of the key Brazilian markets can be identified as :

Industries including mining : Brazil has the most industrially advanced economy in South America. The main manufacturing industries include automobiles, petrochemicals, cement and construction and aircrafts. About 74% of its exports consist of manufactured and semi-manufactured goods . Trade is primarily engaged in with the European Economic Council (EEC) and the USA . Other important industries include food and beverages, textiles and consumer durables. Mining is also considered to be an essential industrial activity. The mining and manufacturing industry is expected to achieve high growth rates in 2007 according to the latest CNI (Confederacao Nacional da Industria) estimates. However, industrial growth over the period 1995-2006 have shown that annual growth rates have fallen from 16% to 4% over that period. The Brazilian economy has also made great forays into the energy sector with reduced dependence on imported oil. Brazil is now one of the world’s leading hydroelectric power producers. Incidentally, the 12,600 megawatt capacity Itaipu Dam on the Parana River is the world’s largest hydroelectric power plant. Brazil is engaged in deep water oil research which accounts for about 73% of its reserves.

Agricultural and mineral resources : A complex agribusiness sector consisting of cattle and crop raising activities with the advent of green revolution and the subsequent growth has helped the economy advance in the agricultural sector . Agriculture still employs a larger population of the workforce than is employed in the industrial sector. Although a lower percentage to the total GDP, family agriculture or “Pronaf” is the accepted system in Brazil which helps in better equipment and cultivation techniques and encourages the adoption of new technology. Credit, Research and Extension programs and special line of credits for women and young farmers have boosted the agriculture sector tremendously. Primary exports in the agricultural sector include raw canes, soybeans, refined sugar and short-timber fiber cellulose. Basic mineral resources such iron and manganese are found in large quantities in the country provide raw materials for the industries and also helps in export earnings. Other minerals extracted include bauxite, copper, lead, zinc and gold.

 

Money and capital markets : As far the as the money and capital markets are concerned, the inflation rates measured by the Consumer Price Index (CPI). It was low at 3.1% as in 2006 and as per the interest rates as administered by the Central Bank of Brazil (Banco Central do Brasil) in 2007, they hovered around 12.5%. The Brazilian currency of Cruzeiro Real was replaced by the Real in 1994 which many say has led to the overvaluation of the currency against the dollar. Bovespa or the Sao Paulo Stock Exchange is the largest stock exchange in Brazil and in the whole of Latin America. Bovespa is linked to all Brazilian stock exchanges and also with the Boverj of Rio de Janeiro. The number of companies traded in Bovespa is close to 550 with the benchmark indicator being the 50-stock Indice Bovespa .

Labour market : The labour market in Brazil experiences a high unemployment rate of 9.6% as in 2006. However, there has been a growth in the number of formal jobs until recently which has mainly been attributed to foreign trade and a growth in the important export sectors such as rubber, leather and the fur industries as well as along all the industrial sectors which have stimulated the demand for labor.