BRAZIL

Noelle Bailey

Overall Score:56.6 World Rank:118

Brazil Quick Facts/United States

  • Population: 198.3 Million /316.4 Million
  • GDP: $2.4 Trillion /16.8 Trillion
  • GDP Growth: 2.3% /1.9%
  • GDP Per Capita: $12,221 /$53,101
  • Unemployment: 6.6% /7.5%
  • Inflation: 6.2% /1.5%
  • Foreign Direct Investment: $64.0 Billion /$187.5 Billion

7 Major Sources of Economic Progress

Legal System

Freedom from corruption is repressed. Property freedom is between the lines of mostly unfree and repressed. 85% of Brazilians disapprove of president Rousseff's policies on corruption and crime.

Competitive Markets

Low on-farm production costs have helped to make Brazil a competitive exporter of soybeans, grains and meats despite challenges, such as bad transportation, high interest rates, currency appreciation, etc. Brazilian exports are likely to grow more slowly in the current environment. The financial sector is diversified and competitive, but the state's role remains significant.

Limits on Government Regulation

Labor Freedom in Brazil is mostly unfree. Business freedom has been moderately free, up until around 2005 where it went back down to mostly unfree to borderline repressed. The non-salary cost of employing a worker adds to the cost of doing business, and labor regulations remain stringent. Inflation has been increasing since 2011, and the government has imposed price controls and subsidies. Progress in reforming the regulatory framework has been uneven.

An Efficient Capital Market

Investment freedom in Brazil has remained on the line of mostly unfree/repressed. State-owned banks control over a quarter of assets and direct loans to certain preferred sectors. The government has worked to improve customs procedures, but non-tariff barriers deter imports of goods and services.

Monetary Stability

Monetary freedom today is mostly/moderately free. Brazil’s economic freedom score is 56.6. Brazil experienced declines in half of the 10 economic freedoms including investment freedom, the management of government spending, and monetary freedom. Improvements in financial freedom and freedom from corruption have been largely offset by deteriorations in the area of regulatory efficiency, including business freedom and labor freedom.

Low Tax Rates

Fiscal freedom is moderately free while government spending is mostly unfree. The top individual income tax rate is 27.5 percent. The top corporate tax rate of 34 percent includes a 15 percent corporate tax, a corporate surtax, and a 9 percent social contributions tax on net profits. The tax burden is equivalent to 35.3 percent of domestic income. Public spending equals 40.4 percent of GDP, and public debt amounts to 66 percent of the economy.

Free Trade

Trade freedom in Brazil is moderately free. Brazil’s average tariff rate is 7.7 percent. Foreign investment in aviation, insurance, and other sectors is limited. The financial sector is diversified and competitive, but the state’s role remains significant. Trade freedom has remained about the same(moderately free) for the past 5 years.
Is Brazil escaping the economic crisis?
IMF says Brazil should recover from the economic crisis faster than its neighbors. 242,000 jobs created. Their unemployment rate has stabilized at 8%. Brazil made trade relations with China to recover better. They are recovering well.

Brazil Facts

  • The largest country in South America.

  • The only Portuguese speaking country in the Americas.

  • Brazil is one of the world's leading producers of hydroelectric power.

  • The fifth largest country in the world.