This information is derived from the State Department's Office of Investment Affairs’ Investment Climate Statement. Any questions on the ICS can be directed to
Last Published: 7/31/2017

Brazil is the second largest economy in the hemisphere behind the United States, and the ninth largest economy in the world. The United Nations Conference on Trade and Development (UNCTAD) named Brazil the eighth largest destination for global Foreign Direct Investment (FDI) flows in 2015. In recent years Brazil received more than half of South America’s total incoming FDI and the United States is a major foreign investor in Brazil. The Brazilian Central Bank (BCB) indicated that the United States had the largest single-country stock of FDI (USD 112 billion) in Brazil in 2014, the latest year with available data. The Government of Brazil (GOB) made attracting private investment in infrastructure a top priority for 2017.

Brazil’s recession has been longer and deeper than most economists anticipated. The country’s Gross Domestic Product (GDP) contracted by 3.6 percent in 2016 and is projected to grow only 0.4 percent in 2017. Per capita GDP decreased 4.4 percent in 2016 for a combined drop of almost 10 percent over two years. While unemployment stood at just 6.5 percent as recently as 2014, it ended 2016 at 12 percent and is projected to end 2017 above 13 percent. Brazil was the world’s eighth largest destination for FDI in 2015, with inflows of USD 64.6 billion, according to UNCTAD. The nominal budget deficit stood at nine percent of GDP (USD 161.7 billion) in 2016 and is projected to end 2017 at around 10 percent of GDP (USD 180.1 billion). Brazil’s debt-to-GDP ratio reached 70 percent in 2016 and is projected to reach 77 percent this year. In part due to the slower than anticipated return to growth, annual inflation fell to 6.3 percent by the end of 2016 - inside the Brazilian Central Bank’s (BCB) target range of 4.5 percent +/- two percentage points - for the first time in two years. This allowed the BCB to cut its benchmark interest rate to 11.25 percent (from a high of 14.25 percent in 2016) in April 2017.

President Temer, who took over as president after the impeachment of former President Dilma Rousseff in May 2016, is pursuing corrective macroeconomic policies to stabilize the economy. Congress approved a landmark federal spending cap in December 2016 and is now debating a complementary reform to curb social security spending. If a robust social security reform is approved, financial analysts assert investor confidence in debt sustainability will strengthen. Additional reforms to increase labor market flexibility and to rationalize Brazil’s complex tax system are also on the agenda. International capital markets have recognized Temer administration efforts, lowering risk premiums significantly from 2015 peak levels and boosting the value of the real. 2016 and early 2017 foreign direct investment inflows have been strong. Both portfolio and direct investors, however, remain sensitive to political uncertainties linked to ongoing corruption scandal investigations (please see corruption section) and Brazilian risk premiums fluctuate accordingly.

Notwithstanding the current macroeconomic context, Brazil’s large economy and vast middle class continue to make the country a destination for long-term investment, particularly in consumer products, albeit not without challenges.

With a USD 1.8 trillion economy, a population of over 200 million, and a large middle-class consumer base, Brazil is a top 10 destination for global FDI. The GOB investment promotion strategy prioritizes the automobile, renewable energy, life sciences, oil and gas, and infrastructure sectors. Foreign investors in Brazil receive the same legal treatment as local investors in most economic sectors; however, foreign investment is restricted in the health, mass media, telecommunications, aerospace, rural property, maritime, and air transport sectors. The Brazilian Congress is currently considering legislation to liberalize restrictions on foreign ownership of rural property and airline companies.

In addition to current economic difficulties, since 2014, Brazil's anti-corruption oversight bodies are investigating allegations of widespread corruption involving state-owned energy firm Petrobras and a number of private construction companies. Analysts contend that high transportation and labor costs, low domestic productivity, and ongoing political uncertainties hamper investment in Brazil. Foreign investors also cite concerns over poor existing infrastructure, rigid labor laws, and complex tax, local content, and regulatory requirements; the so-called “Custo Brasil” (Brazil Cost).

Table 1




Website Address

TI Corruption Perceptions Index


79 of 175

World Bank’s Doing Business Report “Ease of Doing Business”


123 of 190

Global Innovation Index


69 of 128

U.S. FDI in Partner Country ($M USD, stock positions)


USD 111,715

World Bank GNI Per Capita


USD 9,850

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Brazil Economic Development and Investment Law