Brazil - Market OverviewBrazil - Market Overview
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Brazil is the largest country in South America, the second largest economy in the Western hemisphere behind the United States (*), and the ninth largest economy in the world. In terms of foreign direct investment (FDI) into the United States, Brazil is among the top 18 sources and is the seventh fastest growing country.
(*) https://www.state.gov/e/eb/rls/othr/ics/2016/wha/254511.htm (open in Google Chrome)
Larger than the continental United States, Brazil ranked as the United States' tenth largest export market for goods in 2017, importing US$ 37.1b in goods, a 23% increase from the previous year. Brazil is also a significant market for U.S. services, accounting for US$ 26.4b in exports. With a total of US$ 63.5b in trade in 2017, the United States is Brazil’s second largest trading partner behind China. (Source: BEA)
According to the United Nations Council on Trade and Development (UNCTAD), despite a decrease in value, Brazil rose to the seventh highest global destination for FDI in 2016 (latest figures available), with inflows of US$ 58.7b. In 2017, Brazil’s debt-to-GDP ratio reached 74%, lower than the 77% projected in 2016. According to the Brazilian Institute of Geography and Statistics (IBGE), the national agency responsible for official statistics, inflation in 2017 was the lowest recorded since 1998. In April 2018, Brazil’s inflation rate accelerated for the first time since the beginning of the year, and continued to rise in May and June due to a 11-day truckers’ strike that brought the country practically to a standstill and cost business millions of dollars. However, inflation is still expected to accelerate slowly due to double-digit unemployment and uneven economic recovery, but remain well below historical averages.
Brazil is still recovering from the worst economic recession in its history, which presents a challenge to U.S. exporters. While initial forecasts estimated a 3% GDP growth for 2018, that figure has been reduced to 1.6% according to the Central Bank of Brazil, following a nation-wide truckers’ strike over fuel prices, unemployment rates around 13%, and declining investment in advance of an unpredictable election. Another notable challenge for potential exporters is the high-level of bureaucracy and taxation (known as “Custo Brasil”).
In October 2018, Brazil will hold general elections which will likely impact the country’s economic trajectory. No fewer than 16 candidates are competing in what analysts describe as the most wide-open election since Brazil’s return to democracy in the 1980s. Former president Luiz Inacio Lula da Silva, who still leads in opinion polls, was convicted of passive corruption and money laundering in 2017 and is currently serving a 12-year prison sentence.
Despite the uncertainty, Brazil represents an excellent partner for experienced U.S. exporters across various sectors. In addition to the domestic appetite for U.S. products and high opinion regarding their quality and value, there have been several significant national successes in the past year:
- Open Skies: In May 2018, the U.S. and Brazil finalized the Open Skies agreement which expands opportunities for future air travel and commerce between the U.S. and Brazil.
- ATA Carnet: Brazil became the third country in Latin America to adopt the ATA Carnet which allows the free temporary entry of U.S. goods.
- eVisa: The U.S. became one of only four countries allowed to participate in a pilot e-visa program which reduces the cost of a visa by 75% with a delivery timeframe of 3-5 business days.
- PPH: The U.S.-Brazil Patent Prosecution Highway (PPH) agreement which accelerates the examination process for corresponding patent applications filed in participating offices has been extended to April 2020.
- Census – Foreign Trade: https://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf
- Global Trade Atlas – (login required) - http://www.gtis.com/gta
Brazil Trade Development and Promotion