Economic Profile - As of late 2010, Brazil’s economy is the largest of Latin America, the second largest in the Americas (after the U.S.) and among the ten largest in the world. From 2000 to 2012, Brazil was one of the fastest-growing major economies in the world, with fast expanding business opportunities and an average annual GDP growth rate of over 5%, with its economy in 2012 surpassing that of the United Kingdom.
However, its growth decelerated in 2013 and the country entered into a deep recession in 2014. Per capita GDP decreased 4.4% in 2016 for a combined drop of almost 10% over two years. While unemployment stood at just 6.5% as recently as 2014, it ended 2017 above 13%. From 2017, however, the economy started to recover again, with a 1% GDP growth in the first quarter. In the second quarter the economy grew 0.3% compared to the same period of the previous year, officially, but slowly, exiting the recession. According to OECD forecasts, Brazil’s GDP growth would pick up to 2.2% this year and 2. 4 % in 2019. Unemployment has also turned around falling by over a percentage point from its 14% peak earlier this year. Lower inflation and interest rates will further support a gradual economic recovery.
The long and deep recession seems to be over, but more needs to be done. Brazil remains a highly unequal country, recent corruption allegations have revealed significant challenges in economic governance and the situation of its fiscal accounts is also challenging, with high and rising public debt. Gross public debt has in fact increased by approximately 20 percentage points of GDP over the last 3 years and stands around 75% of GDP. In 2016, Brazil spent 16% of its budget on interest payments on government debt, which is held by investors, business and upper middle-class savers. This was more than on education and health (9%). According to the 2018 survey on Brazil, published by the OECD, interest payments were the second biggest outlay in the budget, beaten only by social benefits (35%), which were mostly pensions. Given that Brazil’s pension system benefits disproportionately relatively better off public servants, Brazil’s budget actively benefits the wealthy over the poor and leaves no money for investment. Without an urgent reform (expected by 2019), pension expenditure will more than double by 2060, leading to unsustainable fiscal dynamics....READ MORE
Economic Profile - As of late 2010, Brazil’s economy is the largest of Latin America, the second largest in the Americas (after the U.S.) and among the ten largest in the...
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