Brazil Highlights

BRAZIL HIGHLIGHTS

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BRAZIL HIGHLIGHTS

Trade Intelligence
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CONTENTS

Political Scene

01

Population

02

Macroeconomic Conditions

05

Education

07

Health Care System

10

Economy, Infrastructure and Trade

11

Federal Government Programs

21

Energy Potential

22

Environment

25

Technological Innovation

27

Investments and Opportunities

27

Regulatory Agencies

32

Financial System

33

Useful Contacts

35

About Our Sponsor

36

Brazil
POLITICAL SCENE
Federative Republic of Brazil (2012)
Area 3,287,597 sq. mi
Population 193,946,886
GDP US$ 2.031 trillion
Real growth rate
2.70%
Unemployment rate 6%
Population below poverty line
8.5%
Inflation rate 6.5%
Exports US$ 256.040 billion
Imports US$ 226.243 billion
Sources: IBGE, MDIC, BCB.

Brazil is a multicultural democracy, one of the worlds largest economies and an increasingly active
player in the international arena. Concomitantly with its economic position of greater prominence, it
has been gradually assuming a leading role in international forums such as the WTO, the IMF, the
World Bank and the G20.
It is the fifth largest country in the world in size and population.
It is a Federative Republic consisting of 26 States, a Federal District, and 5,565 municipalities.
The President of the Republic is the head of State and of the government and has a 4-year term of
office, with the possibility of re-election for an additional 4-year-term.
The current President is Dilma Vana Rousseff, who has started her tenure on January 1, 2011.

 The Brazilian government system is divided into 3 branches:

Executive: exercised by the President, the Vice-President and the Ministers of State (For
further information, access: http://www2.planalto.gov.br/presidencia/ministros/ministerios).
Legislative: Bicameral, it is responsible for proposing and inspecting the effectiveness of
the laws. It consists of the Federal Senate (with 81 seats and 8-year term) and the Chamber
of Deputies (with 513 seats and 4-year term).
Judiciary: composed of the Federal Supreme Court, Supreme Court of Justice, regional
and State courts and other specific Labor, Electoral and Military Courts.

POPULATION
Brazil has more than 193 million inhabitants. By 2030 the population will reach 208 million, according
to the Institute of Applied Economic Research (IPEA).
Life expectancy is 73.4 years.
The nominal minimum wage increased by 66% over the last 10 years.
According to an IPC-Maps study conducted by IPC Marketing consultants, between 2011 and 2012,
10 million people have escaped extreme poverty (class E). Today only 0.8% of Brazilian families
belong to class E.
Over the past 10 years, it is estimated that 40 million Brazilians rose to the middle class.

Brazil Highlights

At present, 56% of the population belongs to class C (middle class); according to CPS/FGV analyses,
by 2014 this class should represent 60.1% of the Brazilian population.

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Class Composition

Sources: FGV.

Definition of Economic Classes Monthly Income*

Limits
Class Lower Upper
E 1,085
D 1,086 1,734
C 1,735 7,475
B 7,475 9,745
A 9,745
*In R$ as of July/2011
Sources: FGV.

This improvement was due to a combination of different processes: Resumption of economic growth;
Simplification and reduction of the tax burden for small and medium enterprises, which led thousands
of companies into the formal market and allowed access of 1 million workers to social security
benefits; Real increase in the minimum wage; Expansion of income transfer programs by the federal
government.

 It is estimated that, by 2014, classes A and B will comprise 29.1 million people.
The economically active population exceeds 95 million people.
In the end of 2011, the unemployment rate reached the lowest level since it was first measured, in the
beginning of the last decade, and remained around 6% during the first half of 2012.
Unemployment Rate

Income inequality among Brazilians declined in recent years. The Gini Coefficient, which
measures the concentration of income in countries, indicates that Brazil is currently in 84th place in
the world ranking.

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Brazil Highlights

Source: IBGE. Preparation: Amcham.

Gini Coefficient

Source: IPEA.

The Gini Coefficient (or Gini Index) measures the degree of income concentration, in which zero
represents perfect equality and one represents maximum inequality.

MACROECONOMIC CONDITIONS
Brazil ended 2011 as the worlds 6th largest economy.
The growth of the Brazilian economy in the last decade is associated with the rising prices of
commodities, particularly minerals and crops. As a major exporter of iron ore and agricultural products
like soybeans, sugar and coffee, Brazil was able to reduce its external vulnerability by improving the
trade balance and attracting investments.
NEW INSERTION IN INTERNATIONAL TRADE AND CAPITAL MARKET

Trade balance
FDI (net)
Portfolio investiment (net)
(*) estimate.
Source: BCB. Preparation and 2012 approximation: Amcham.

2003 - 2012(*) cumulative

+ US$ 310.6 billion

+ US$ 349.0 billion
+ US$ 212.0 billion

 International reserves jumped from US$ 35.6 billion in the end of 2002 to US$ 380 billion in the end
of 2012. Brazils international reserves have been increasing consistently over the last 12 years.
In 2012 foreign investment reached US$ 65 billion.
The conditions of the international economy and the stability that Brazil has achieved in recent years,
made possible a sharp reduction in internal interest rates: the basic interest rate, known as Selic, fell
from 12.5% p.a. in July, 2011 to 7.25% p.a. in December, 2012.
As far as the public finances are concerned, the advances promoted by the Fiscal Responsibility
Act, passed in 2000, and the successive public sector primary surpluses have led to a significant
reduction of the public sectors net debt, which fell from 60.3% of GDP in January, 2003 to 35.2% in
October, 2012.

Brazil Highlights

Public Sector Net Debt - % GDP

Source: Central Bank of Brazil.

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EDUCATION
According to the Brazilian Constitution, education is a universal right and a duty of the State and the
family.
The Brazilian educational system is divided into Basic and Higher Education, as shown in the chart
below:
Structure of the Educational System

Source: Brasil.gov.br Preparation: Amcham.

In recent decades, Brazil universalized access to elementary education, with nearly 100% of the
children within the age range of 6 and 14 attending school.
In Child Education, involving children from 0 to 5-years old, and in High School, difficulties persist;
neither has been universalized so far, although they have had enormous progress in recent years,
especially through partnerships between public entities States, municipalities and the federal
government and the private sector. At the basic education level, 85% of the places are provided by
the public education.

Enrollment in Basic Education by Stages and Method of Education 2011

Source: INEP.

In Basic Education alone there are more than 2 million teachers.

The latest Higher Education Census, conducted in 2011, found that there are 2,365 higher education
institutions in Brazil, offering more than 30,000 different programs. Access to Higher Education in the
country is through the so-called vestibular, a specific test to each university/college, which evaluates
the student in all subjects studied during High School.
In Higher Education, places are offered both by the public system, which accounted for 1.7 million
in 2010, and private institutions, with 4.7 million in the same year.
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Brazil Highlights

Source: MEC/INEP and MEC/CAPES

 The growth of access to Higher Education in the last decade was due to the expansion of places in
public universities, which grew 74% between 2001 and 2010, and private institutions, whose enrollment
increased 126% during the same period.
Aware of the deficiencies in the quality of Higher Education in Brazil, particularly in the areas of
engineering and natural sciences, the federal government has implemented a vigorous program of
scholarships abroad called Science without Borders.
Amcham has signed an agreement with the CNPq (National Council for Scientific and Technological
Development) and CAPES (Coordination of Higher Education Personal Improvement) with the purpose
of encouraging students to go abroad for training through the Science without Borders program.
In 2011, the federal government launched the PRONATEC (National Program for Access to Technical
Education and Employment), designed to enable young people and workers to obtain better
qualifications to enter the labor market and consequently secure better positions and at the same
time increase Brazils productivity and income.
The governments main incentives for education in the country are:

Source: MEC. Preparation: Amcham.

HEALTH CARE SYSTEM

As with education, the Constitution determines that health care is a right
of all Brazilians and a duty of the State, and is provided by both, the
public sector and the private sector.
Free access to health services is provided through the Unified Health
System (SUS), established in 1988. Some 70% of the population depends
solely on this system.
The SUS is a network of public and private hospitals, specialized clinics
and basic health care units remunerated for the services provided and
funded by tax resources from the three levels of government federal,
State and municipal according to a hierarchy established by law. The
SUS system has over 6,000 accredited hospitals.
Besides the SUS, there are private health care plans and health insurance
plans available. These plans are directly hired by users or offered as
benefits by employers. Currently, 58.6 million people are beneficiaries
of health care or insurance plans that provide access to hospitals,
laboratories and clinics.
To regulate and supervise the services delivered by providers and
insurers, the ANS (National Health Insurance Agency, the regulatory
agency under the Ministry of Health) was created in 2000.

Brazil Highlights

At the same time, the three levels of government maintain preventive health
programs such as vaccination programs and educational activities, with
much collaboration from NGOs and other civil society organizations. They
contribute to the reduction of child mortality and improve the populations
quality of life, particularly in the most vulnerable areas.
Aiming at protecting the populations health, the National Health Surveillance
Agency (ANVISA) was established in 1999. It is in charge of the sanitary
control of production, sales and imports of products and services subject
to health surveillance.
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ECONOMY, INFRASTRUCTURE AND TRADE

A series of economic reforms undertaken during the 1990s resulted in greater opening of the Brazilian
economy, boosting the domestic market and controlling inflation. The fundamentals of these reforms
are being maintained, which gives the Brazilian economy unprecedented stability.
Brazils GDP ended 2011 with a growth of 2.7%. In the first half of 2012, the growth was 0.6%,
compared with the same period in 2011.
Brazils per capita GDP at the end of 2012 was at US$ 12,339 in current values.
In 2011, Brazils GDP surpassed the UKs, and the country became the worlds 6th largest economy.

GDP Evolution

Source: IBGE. Preparation: Amcham.

GDP Growth Projections

Source: FMI. Preparation: Amcham.

The State of Sao Paulo has the largest share of Brazils GDP, followed by Rio de Janeiro and Minas
Gerais.

Brazil Highlights

Brazilian States with the Greatest Share of the GDP* %

* 2009
Source: IBGE.
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 According to research conducted by Amcham in partnership with Ibope at the Business Round
Up Outlook for 2013 seminar, the Brazilian business community believes in an improvement in the
economic scenario for 2013. Of the members surveyed, 81% expect an increase in sales and 71%
believe in higher profits for 2013.
Foreign Trade
In 2012, Brazilian foreign trade showed a record trade flow of US$ 465.729 billion, 3.48% higher than
in 2011.
Brazilian exports reached US$ 242.5 billion in 2012 (46.77% commodities, 37.39% manufactured
goods, 13.62% semi-manufactured goods).
The main products exported in 2012 were: ores (US$ 30.9 billion), oil and fuels (US$ 20.3 billion) and
soybeans (US$ 17.4 billion).
Compared to 2011, in 2012 commodity exports were down by 30.1%, semi-manufactured goods
by 34.5% and manufactured goods by 30.7%. The main reasons for this were the economic crisis in
Europe.
Imports also resulted in a drop reaching US$ 223.1 billion, 1.37% lower than in 2011.
The main products imported were: fuels and lubricants (US$ 40.1 billion), mechanical equipment
(US$ 34.6 billion), and electrical and electronic equipment (US$ 25.4 billion).
Due the world crisis the trade surplus in 2012 was US$ 19.4 billion.

Brazils Major Trading Partners - 2012 Share (%)

Brazilian Exports by Destination
17% China
11% United States
7% Argentina
6% Nethrlands
3% Japan
3% Germany
2% India
2% Venezuela
49% Others

Brazilian Imports by Origin

Brazil Highlights

15% China
15% United States
7% Argentina
6% Germany
4% South Korea
4% Nigeria
3% Japan
3% Italy
3% Mexico
3% France
37% Others
Source: MDIC. Preparation: Amcham

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Brazilian Trade Balance (US$ billions)

Source: MDIC. Preparation: Amcham.

Agriculture, Industry and Services

From a viewpoint of demand, in 2011, agriculture led the growth with 3.9%, followed by the services
sector (2.7%) and by industry (1.6%).
Variation in GDP by sector (%)

Source: IBGE. Preparation: Amcham.

According to the Ministry of Agriculture estimates, production in 2012/13 will be the highest ever,
reaching 180 million tons of grains, an 8.4% increase compared to 2011/12. Brazil is the worlds
largest producer of oranges, coffee, beef and sugar. It is also the largest exporter of oranges, coffee,
soybeans, poultry and sugar.

 Brazilian agribusiness exports in 2012 reached a record of US$ 95.8 billion, 1% higher than in 2011
(US$ 94.9 billion).
Soybean complex products, sugarcane complex and meat were the main contributors to the Brazilian
exports sector. The main destinations were the EU, China, the USA, Russia and Japan.
Imports of agricultural products closed 2012 at US$ 16.4 billion, which represents a decrease of
6.2% compared with 2011. This result was influenced by widespread deflation in the average prices of
products from Brazil in the international market due to stock exchange variations. The trade balance
closed with a surplus of 3%.
Brazil has 68 million hectares of planted area, with the highest concentration in the States of Mato
Grosso (14.7%), Parana (14.5%), Rio Grande do Sul (11.8%) and Sao Paulo (11.4%).
Cereals, pulses and oilseeds: Participation in the national production, according to the major regions
and federation units 2013 (%)

1. Products: herbaceous cotton (cottonseed), peanuts (in shell), rice (paddy), beans (grain), castor seed (in berry), corn (grain), soybeans (grain), oats
(grain), rye (grain), barley (grain), sunflower seeds (beans), sorghum (grain), wheat (grain) and triticale (grain).
2. Due to the needs of the users of crop data, surveys of cereals, pulses and oilseeds have been conducted in close collaboration with the National Supply
Company - (Companhia Nacional de Abastecimento - Conab) agency of the Ministry of Agriculture, Livestock and Supply (Ministrio da Agricultura,
Pecuria e Abastecimento - MAPA), continuing a process of harmonization of official harvest estimates, which started in October 2007, of the main
Brazilian crops.
Source: PWC.

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Brazil Highlights

39% South
39% Midwest
11% Southeast
9% Northeast
2% North

 OECD projections suggest that the world food supply needs to grow 30% by 2020 and that Brazil
should account for 40% of this additional demand. Research conducted by Amcham among its
members shows that 61% of companies believe to be aligned with such growth forecast.
The area that contributed most to the industrial sectors growth was manufacturing, which represented
53% of the sector in 2011.
In industry, the subsectors that showed the best results were automotive vehicles (2.4%) and other
transport equipment (8%).
In the services sector, the largest increases were in the subsectors of information services
(4.9%), financial intermediation and insurance (3.9%), trade (3.4%), and transport, storage and
mailing (2.8 %).
Trade and services were the sectors that generated most jobs in 2011 more than 925,000 in
services and 452,000 in trade.
Sao Paulo and Rio de Janeiro stand out as the States with the largest share of GDP by sector.
Share of States in GDP* - By Sector
Share in Value Added on
Transformation Industry - 2009

* 2009
Source: IBGE.

Share in Value Added of

Mining Industry - 2009

Share in Value Added of

Agriculture - 2009

Share in Value Added of

Services - 2009

* 2009
Source: IBGE.

Tourism
In 2012, there were over 8 million foreign arrivals to the country.
Central Bank figures show that in 2012 foreign tourists spent US$ 6.6 billion in Brazil, compared to
US$ 6.5 billion in 2011.
On the other hand, Brazilians spendings abroad set a new record in 2012, totaling US$ 22.2 billion,
which represents an increase by 5% compared to 2011.
From the supply perspective, the total wealth produced by tourism in 2011 exceeded US$ 127
billion. This sector represents 3.6% of the Brazilian economy.
The most visited cities by tourists in Brazil are Sao Paulo and Rio de Janeiro.

Mercosur
Created in 1991 by the Treaty of Asuncion, the Southern Common Markets main goal is the free
circulation of goods, services and production factors among its members.
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Brazil Highlights

Research conducted by IBGE in 2011 on the hosting network in 27 Brazilian capitals showed that there
are 5,036 establishments in the sector, with a total capacity of 373,673 beds. Of the establishments,
40.7% are concentrated in the cities of Sao Paulo, Rio de Janeiro, Salvador and Belo Horizonte.

 Current members are Argentina, Brazil, Paraguay, Uruguay and Venezuela. Paraguay was temporarily
suspended after the ousting of president Fernando Lugo in June, 2012.
Brazil is the main gateway for MERCOSUR.
In 2012, Brazil exported US$ 27.8 billion to the other countries of the bloc, of which 85.61% were
manufactured products, and imported US$ 20.2 billion.
Transports
There are 67 airports in the country, of which 28 are international.
International Airports

Source: Brasil.gov.br.

 Of the 16 largest investment projects in the world in the area of transports, four are in Brazil: two related
to the railway network, one involving subway expansion, and one for the construction of highways.
There are 37 public ports in Brazil. The most important is the port of Santos, in the State of Sao Paulo,
the busiest container port in Latin America.
The highway network has 1.056 million miles of federal, State, municipal and concession roads,
accounting for 61.8% of the cargo moved in the country.
The federal government assigned to the private sector, in August, 2012, a package of incentives for
the improvement and modernization of roads and railways. The private sector will be responsible for
the duplication and maintenance of 4,660 miles of highways and 6,213 miles of railways.
Telecommunications
Brazil is the 5th largest IT market in the world in terms of billing, with revenues of US$ 212 billion
(4.5% of GDP). The goal is to reach 3rd place by 2022, with revenues of around US$ 430 billion.
In the first half of 2012, smartphone sales in the country grew 77% compared to the same period in
2011, totaling 6.8 million units sold.
Sales of tablets also had a large increase. In the second quarter of 2012, 606,000 handsets were
sold (275% more than the same period of 2011). By the end of 2013, 2.6 million units are expected to
be sold.
A survey conducted by Accenture shows that Brazilians are the worlds largest electronics consumers.
Eletronics Sales - 2011
56 million
15.4 million
9 million
1.3 million
800,000

Brazil Highlights

Traditional cell phones

Desktops and notebooks
Smartphones
Netbooks
Tablets
Source: IDC Brasil.

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 In 2012, IT spending in Brazil should reach US$ 126.3 billion and in 2013 it is expected to reach US$
135 billion, according to a Gartner survey.
According to an Ibope Nielsen survey, the number of Brazilians with Internet access reached a
record 83.4 million people. Most of the Internet accesses are from home or work.
The Ministry of Science, Technology and Innovation (MCTI) launched in October, 2012 the TI Maior
(Bigger IT) program to encourage development of software in the country. By 2015, US$ 500 million
will be invested through it.

FEDERAL GOVERNMENT PROGRAMS

ENERGY POTENTIAL
Electric power
The domestic supply of energy is comprised of 55.8% of non-renewable sources and 44.2% of
renewable sources.
Industry is the largest consumer of electric power in Brazil, using 56% of renewable sources, followed
by the transports sector, which mostly uses diesel (47.3%).

Renewable
Sugarcane biomass
Hydraulic and eletricity
Firewood and charcoal
Leaches and other renewable

44.20%
15.7%
14.7%
9.7%
4.1%

Non-renewable
Oil and derivatives
Natural gas
Mineral coal
Uranium

55.80%
38.6%
10.1%
5.6%
1.5%

Who Used Power - 2011

Industry

35.9%

Transports

30.1%

Residences

9.5%

Energy Sector

8.9%

Agriculture

4.0%

Services

4.4%

Non-energy use

7.2%

Source: Energy Research Company/Ministry of Mines and Energy.

Preparation: Amcham.

Source: Energy Research Company/Ministry of Mines and Energy.

Preparation: Amcham.
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Brazil Highlights

Breakdown of Domestic Energy Supply

 The largest part of the Brazilian electric power matrix comes from hydropower.
Brazilian Energy Matrix - 2001

81.7% Hydraulic 2
6.5% Biomass 3
4.6% Natural Gas
2.7% Nuclear
2.5% Petroleum Derivatives
1.4% Coal and Derivatives 1
0.5% Wind

1: includes coke oven gas

2: includes imports
3: includes wood, sugarcane bagasse, leaches and other recoveries
Source: Energy Research Company/ Ministry of Mines and Energy. Preparation: Amcham.

In 2011, the share of renewable sources in electricity production in Brazil reached 88.8% (the worlds
average is 19.5%).
The Southeast and the Northeast regions are the countrys largest electric power consumers. In
2011, they accounted for 45.5% and 26% respectively of the electric power consumed in Brazil.
In 2003, the federal government launched the Luz para Todos (Light for All) program, with the aim of
bringing free electric power to more than 10 million people in rural areas. This goal was achieved in
2009, and by 2011 the program reached more than 14.4 million people.
The energy sector has been receiving great attention from the federal government. Among the
15 largest projects in the sector in the world, six are in Brazil. The projects receiving the largest
amounts of investments are the Belo Monte (US$ 16 billion) and Sao Luiz do Tapajos (US$ 12.6 billion)
power plants.

Oil and the pre-salt layer

The largest oil reserves in the country are off the southeastern coast, in the pre-salt layer, a deepwater
area (more than 6,000 meters deep) that extends over some 500 miles between the states of Santa
Catarina and Espirito Santo.
The reserves are the property of the Brazilian State and are operated under concession or shares
with the participation of Petrobras and other Brazilian and foreign private companies.

Brazil Highlights

Pre-Salt Oil Produc

Source: Petrobras.
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 200,000 barrels of oil are produced daily in the pre-salt region. By 2017, production of 1 million
barrels per day is expected to be achieved.
Petrobras, the fifth largest energy company in the world according to the PFC Energy ranking,
produced 2.021 million barrels of oil per day in 2011.
In 2012, oil consumption in Brazil is expected to reach 2.86 million barrels per day, according to the
International Energy Agency (IEA).
Biofuel
In 2012, Brazil is expected to overtake Germany and become the worlds largest producer of biodiesel.
Current Brazilian production of biodiesel is 2.4 billion cubic meters per annum.
The two main biofuels produced in the country are ethanol, made from sugarcane, and biodiesel,
made from vegetable oils or animal fats.
Brazil has 57 plants for biodiesel production, with capacity of 6.019 million liters/year. Most of these
plants are in the Center-West region, where there are 25 of them. The States of Rio Grande do Sul,
Goias, Mato Grosso and Sao Paulo account for 82.5% of the national production.
According to F. O. Licht Christoph Berg estimates, Brazils ethanol production in 2012/2013 will reach
24 billion liters; in 2011/2012 it was 22.7 billion liters.

ENVIRONMENT
Brazil has the highest biodiversity in the world. Over 20% of all species on Earth are found in
the country.
The Amazon rainforest is the worlds largest rainforest. With its 4.2 million sq. km, it is the planets
largest biodiversity reservoir and covers almost half of the Brazilian territory.

The Brazilian Biomes

Source: Brasil.gov.br

Brazil is the worlds 10th largest investor in clean energy. The report Who is Winning the Clean Energy
Race (under PEWs responsibility) shows that Brazil spent US$ 8 billion in the sector in 2011.

In October 2012, President Dilma Rousseff approved the countrys New Forest Code (Novo Cdigo
Florestal), which intends to be more modern and adapted to the countrys reality. It regulates land use
and native vegetation stewardship.

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Brazil Highlights

The Green Grant Program (Programa Bolsa Verde), which aims at environmental preservation, was
launched in 2011. Part of the Brazil without Poverty Program (Plano Brasil sem Misria) is coordinated
by the Ministry of the Environment (MMA).

TECHNOLOGICAL INNOVATION
There are currently 384 business incubators operating in Brazil and 2,640 incubated companies.
Together, their revenues reached R$ 270.9 million in 2011. Of these companies, 55% focus on the
national level.
There are 31 technology parks in Brazil, 17 under development and 32 being planned.
The National Bank for Economic and Social Development (BNDES) invested R$ 2.6 billion in innovation
programs in 2011, 92% more than in 2010.
In 2011, there were nearly 32,000 patent applications and more than 152,000 trademark registrations.
More than 164,000 applications are under analysis.
Research conducted by Amcham with 128 representatives of companies and organizations focused
on innovation in Brazil indicates that 30% believe that promoting initiatives to demonstrate that
innovation in the country works and generates profit is the main priority to make the environment more
conducive for innovation.

INVESTMENTS AND OPPORTUNITIES

Foreign Direct Investment in 2011 exceeded Central Bank projections and closed the year with a
record US$ 66.7 billion. This amount represents 37.4% more than in the previous year.
In 2012, FDI was US$ 65.2 billion and Brazil became the 4th country in foreign investment inflow, only
behind the United States, China and Hong Kong.
Sao Paulo was the 4th city in the world to receive foreign investment in 2011, after London, Shanghai
and Hong Kong, according to a study conducted by KPMG consultants and the French agency ParisIle de France Capital conomique. About 30% of the value invested was allocated to industry.
The 2012-2013 Global Competitiveness Report, a study conducted by the World Economic Forum
to assess the degree of competitiveness of countries based on economic, institutional, social and
business variables, showed that Brazil climbed 5 positions and now occupies the 48th position among
144 countries.

Stage
ofDevelopment
Development
Stage of
Transition
1-2

1
Factor
driven

Transition
2-3

3
Innovation
driven

Efficiency
driven
Institutions
7
Innovation

6
5
4

Business
sophistication

Infrastructure

Macroeconomic
environment

3
2
Market size

Health and
primary
education

Higher education
and training

Technological
readiness
Finacial market
development

Goods market
efficiency
Labor market efficiency

Brazil

Economies in transition from 2 to 3

Source: World Economic Forum.

A survey conducted by KPMG with CFOs of 350 companies from several countries pointed out that
Brazil is the 4th most interesting destination for investments in the next two years, after Canada, the
USA and China.

The Brazilian health sector is also attracting and increasing foreign interest. The country has about
1,600 hospital-medical and dental insurance companies, which generated R$ 85 billion in 2011.
One example is the recent purchase of Amil by the American company UnitedHealth, with interest in
developing services for the growing class C.
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Brazil Highlights

Brazil is the 8th largest consumer market in the world and can attain the 5th position by 2020,
surpassing France, England and Italy, thus attracting investments in various sectors.

 As a result of Brazils growing income, the franchise sector is expanding and earned R$ 90 billion in
2011, attracting the interest of foreign brands with the possibility of entering the Brazilian market.
The IT sector accounted for 105 of the 507 FDI projects in Brazil in 2011, according to Ernst & Young
data. The National Broadband Program is responsible for the increasing demand in the sector. This
program facilitates the cable TV market for, telephone companies with foreign ownership over 49%.
Public-Private Partnerships (PPPs) are available through bidding for service contracts valid for 5 to
35 years worth more than R$ 20 million that do not involve the supply of labor and equipment or the
execution of public works alone.
World Cup 2014
In 2007, Brazil was chosen to host the 20th edition of the FIFA World Cup in 2014. Twelve cities
across the country will host the event: Belo Horizonte, Brasilia, Cuiaba, Curitiba, Fortaleza, Manaus,
Natal, Porto Alegre, Recife, Rio de Janeiro, Salvador and Sao Paulo.
R$ 33 billion will be allocated to the infrastructure of the event. Most of this (R$ 11.6 billion) will be
allocated to the transport sector.
2014 Word Cup Investments - R$ billions

Source: Ministry of Finance. Preparation: Amcham.

2016 Olympics
In 2009, Rio de Janeiro was chosen to host the 2016 Olympics. The COB Comit Olmpico Brasileiro
(Brazils Olympic Committee) estimates that the Brazilian government will invest more than US$ 12
billion in the event.
By 2015, more than US$ 5 billion will be invested to improve the citys infrastructure and transport
system. With this, Rio de Janeiro will receive a renovated train and subway system and three Rapid
Transit Bus systems.
According to IPEA (Institute of Applied Economic Research), investments for the Olympics will
generate US$ 51.1 billion in economic drive in various sectors, and will create 120,000 jobs per year
until the event.
Mergers and Acquisitions

Foreign companies interest in Brazil is noted by the number of acquisitions of Brazilian companies
by foreign firms. The table below shows that, despite the global economic crisis, this number has
been growing since 2009. Acquisitions by foreign companies in Brazil increased from 17 in 2009 to
44 in 2011. However, the value of the transactions fell, which may be the result of a decrease in the
average size of the companies traded and/or of a deflation process in the value of assets in Brazil
and worldwide.
The internationalization of Brazilian companies is also reflected in the number of transactions for the
acquisition of foreign companies by Brazilian companies.
29/30

Brazil Highlights

National Association of Financial and Capital Market Entities (Anbima) data shows an increasing
number of transactions. Most of them involve only Brazilian companies, but transactions involving
foreign companies are not few.

Acquisitions in Brazil 2009-2011

(*) Brazilian Trading Target Companies

Source: Anbima

In the first half of 2012, the number of transactions and the value fell compared with the first half
of 2010 and 2011. There was also a reduction in the value of acquisition operations on the part
of Brazilian companies and a predominance of transactions in which foreign companies acquired
companies in Brazil, either of national capital or another foreign capital company. Adding the numbers
of acquisitions by foreign companies, they make up almost half of the transaction values in the first
half of 2012.
Acquisitions in Brazil 1st Semester 2010-2012

Source: Anbima

 The almost 70 transactions that took place in 2011 and 2012 in one semester, involving more than R$
50 billion, is a quite significant number, although there has been a reduction compared to 2010. The
increase in the number of acquisitions of Brazilian companies by foreign ones reveals that the foreign
investors appetite for Brazil remains high, in spite of the slowdown of the economic growth.

REGULATORY AGENCIES

Brazil Highlights

Due to the vast privatization process carried out in the country in the 1990s, the Brazilian government
created Regulatory Agencies to inspect and ensure the quality of products and services provided to
the population, as well as to encourage innovation and competitiveness in many sectors.

31/32

FINANCIAL SYSTEM
Despite the global economic crisis that started in 2008, the Brazilian banking system continued the
expansion process it has been going through since the beginning of the decade, as can be seen in
the table below.

1 - Refers to financial system credit based on the accounting report Economic and Financial Statistics (Estfin), mandatory appendix of the institutions
monthly statement of account. The only exception is the granting to financial intermediaries. Earmarked and non-earmarked resources are included.
2 - Last 12-month GDP cumulative data-current values.
3 - Available resources may be defined according to Circular 2,957 dated 12.30.1999. Mortgage loan companies and Development Agencies are not
included.
4 - Refers to credit operations with compulsory or government resources.
5 - Refers to those institutions in which federal, state or municipal governments hold more than 50% of the voting capital, according to Circular-Letter
2,345, dated 1.25.1993.
6 - Refers to those institutions in which individuals or corporate entities domiciled and resident in the country hold more than 50% of the voting capital,
according to Circular-Letter 2,345, dated 1.25.1993.
7 -Refers to those institutions which have under external control, either directly or indirectly, the majority of voting capital. It also includes those established
and headquartered abroad with agencies or branches in the country, according to Circular-Letter 2,345, dated 1.25.1993.
* Preliminary data.
Source: Brazilian Central Bank

 The main reason for the Brazilian financial system stability is its strict regulation, based on the
principles of the Basel Accord and on the control of the organizations leverage by monetary and
financial authorities.
In addition, the regulatory apparatus has supervisors for each market segment, with extensive
expertise of its operation. The table below shows the financial activities system supervisory structure.
Brazilian Federal Regulatory Agencies and its Functions

Source: Brazilian Central Bank

All transactions are settled through the Sistema de Pagamentos Brasileiro SPB (Brazilian Payment
System), a network that interconnects the Central Bank with the banks, central securities depositories
and clearing houses. The SPB offers payment arrangements in real time (RTGS) and several private
clearing houses settle financial transactions on the net transaction value, as is the case of securities
and commodities trade at the stock exchange and the over-the-counter (OTC) market.
33/34

Brazil Highlights

Besides the banking system, the Brazilian financial system has a sophisticated capital market,
comprising hundreds of brokerage houses, investment banks and asset managers, as well as the
Stock, Commodities and Futures Exchange BM&F BOVESPA where shares and commodity futures,
interest and exchange rates are negotiated.

USEFUL CONTACTS
Amcham American Chamber of Commerce for Brazil
Rua da Paz, 1431
So Paulo/SP Brazil
Zip Code: 07413-001
Phone: (55 11) 4688-4102
Website: www.amcham.com.br
pesquisas@amchambrasil.com.br
Brazilian Ministry of External Relations
Palcio Itamaraty, Esplanada dos Ministrios, Bloco H
Braslia/DF Brazil
Zip Code: 70170-900
Phone: (55 61) 2030-6161
Website: www.itamaraty.gov.br
CNI National Confederation of Industry Brazil
SBN - Quadra 01 - Bloco C - Ed. Roberto Simonsen
Braslia/DF Brazil
Zip Code: 70040-903
Phone: (55 61) 3317-9000
Website: www.portaldaindustria.com.br
Federal Police: www.dpf.gov.br
Brazilian Government Portal: www.brasil.gov.br
Tourism: www.braziltour360.com
Emergency
Police Phone: 190
Ambulance Phone: 192
Firefighters Phone: 193

BELO HORIZONTE

JOINVILLE

BRASLIA

PORTO ALEGRE

CAMPINAS

RECIFE

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GOINIA

Av. T-63 Qd. 145 Lote 08/09

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RIBEIRO PRETO

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Edf. Salvador Trade Center
Torre Norte, sala 1307 Caminho das rvores
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SO PAULO

Rua da Paz, 1431 Chcara Santo Antnio

04713-001 So Paulo, SP
Tel.: (55 11) 4688-4102 Fax: (55 11) 5180-3777
ombudsman@amchambrasil.com.br

UBERLNDIA

Av. Joo Naves de vila, 1331, 10 Andar, Sala 1 Tibery

Center Shopping - UBT(Uberlndia Business Tower)
38408-902 - Uberlndia, MG
Tel.: (55 34) 2101-4100
amcham.uberlandia@amchambrasil.com.br

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