Economy of Brazil

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Economy of Brazil
Currency	1 Real (R$, BRL) = 100 centavos
Fiscal year	Calendar year
Trade organizations	WTO and SACN
Statistics
GDP ranking	9th (List of countries by GDP (PPP))
GDP (PPP) [1]	$1.507 trillion (2005)
GDP [2]	$796,2 billion (2005)
GNP [3]	$770,7 billion (2005)
GDP growth	2.3% (2005)
GDP per capita (PPP)	$8,300 (2005)
GDP per capita[4]	R$ 10.519,89 (2005)
GDP by sector	agriculture (10.1%), industry (38.6%), services (51.3%) (2004 est.)
Inflation [5]	3.14% (2006 est.)
Pop below poverty line	20% ~40 million people
Labour force	92.860.128 (2004) (50% of pop.)
Labour force by occupation	agriculture (20%), industry (14%), services (66%) (2003 est.)
Unemployment	10.7% (Aug 2006 est.)
Trading Partners
Exports	$137,471 billion f.o.b. (2006)
Main partners	USA 18.0%, Argentina 8.5%, China 6.1%, Netherlands 4.2%, Germany 4.1% (2006)
Imports	$91,394 billion f.o.b. (2006)
Main Partners	USA 16.2%, Argentina 8.8%, China 8.7%, Germany 7.1%, Nigeria 4.3% (2006)
Public finances
Public debt	R$1020 billion (51.6% of GNP) (2005)
External debt	US$136 billion (Aug 2006 est.)
Revenues	$140.6 billion (2004)
Expenses	$172.4 billion (2004)
Budget Deficit	R$ 47,144 billion(2005)
Budget Deficit/GDP [6]	2,67% of the GDP(2005)
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For more information go to Economic history of Brazil.

Brazil has the ninth-largest economy in the world at purchasing power parity as of 2006. Brazil has a diversified middle income economy with wide variations in levels of development.

1 Economy - overview
- 1.1 Major issues
2 Currency Issues
3 Economic Prospects for 2007
4 Statistical Tables
5 See also
- 5.1 Lists
6 External links
7 For Further Reading

[edit] Economy - overview

Possessing large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other Latin America countries and is expanding its presence in world markets.

[edit] Major issues

Brazil's economy has been experiencing more than 26 years of small economic growth, partly due to insufficient savings from both the private and state sectors. An annual budget deficit of around 2.5% of GNP makes the problem worse, because the state requires private savings in order to fill the budget gap.

Current economic growth is below that of comparable Latin American countries and of China and India. Brazil has dropped 11 positions on the WEF Growth Competitiveness Index ranking from 2003 to 2005. [7].

Brazil has been characterized as the "country of the future", as the country has always had the potential to be an economic superpower, but hasn't achieved this status yet. This is summed up in the quote "Brazil is the country of the future-and always will be." Especially during the boom years of the 60s and 70s, many people saw that Brazil was taking its rightful place among the world's largest economies. Weak growth since 1980 has largely derailed this possibility in the near future. [8]

Brazil is part of the BRIC countries, which includes Brazil, Russia, India and China. The Goldman-Sachs paper that proposed this group of countries would have rapid economic growth and by 2050 would eclipse the current major economies. However, Brazil's growth has been weak, so these growth predictions may not occur.

[edit] Currency Issues

Brazil's currency, the real, was introduced in 1994, and is largely seen as a success. Currently, it is considered to be overvalued against the dollar, which hurts exports and helps imports. [9]

However, the strength of the real has gained the confidence of investors, allowing the first bond issued in reals instead of dollars in 2004. Issuing bonds in local currency gives more protecion against currency flucuation and international economic instability. [10] [11]

[edit] Economic Prospects for 2007

The market estimates that the brazilian economy will grow 3.50% in 2007, and that the interst rate will end 2007 at 12%. The brazilian government targeted the GDP growth as of 2007 by 4.5%, according to Guido Mantega.

Central Bank's inflation target for 2007 and 2008 stands at 4.5%, however Central Bank's inflation projection for 2007 is now at 4.13%. The market predicts a inflation of 4.06% for 2007

Market projection for the exchange rate at the end 2007 is R$2.25 for US$1.00.

The market also estimates that the foreign trade surplus for 2007 will be US$ 38 billion, and that foreign direct investment will total US$ 16,1 billion. [12]

[edit] Statistical Tables

Inflation - IPCA is the official inflation index used by the government and Central Bank

Inflation (IPCA)[13]
Year	2001	2002	2003	2004	2005
%	7.67%	12.53%	9.30%	7.60%	5.69%

Gross Fixed Capital Formation [14]
Year	2001	2002	2003	2004	2005
% Of GDP	19.47%	18.32%	17.78%	19.58%	19.93%

GDP Growth [15]
Year	2001	2002	2003	2004	2005
% Change	1.30%	1.90%	0.50%	4.90%	2.30%

Average Exchange Rate[16]
Year	2001	2002	2003	2004	2005
Reals for US$ 1,00 Dollar	2.349	2.920	3.077	2.925	2.434

The next table shows the Income Distribution situation in Brazil and the the Gini coefficient of Brazil. As a comparison, Germany and Sweden have a Gini coefficient of around 0.25. (The higher the Gini, the more unequal the society)

Income Distribution [17]
Year	2001	2002	2003	2004	2005
Richest 10%	47.44%	47.02%	46.19%	45.31%	45.31%
Poorest 50%	12.58%	12.98%	13.22%	13.85%	14.07%
Gini Coefficient	0.596	0.589	0.583	0.572	0.569

The above table indicates that in 2005, for example, the bottom 50% of the population earned only 14,07% of the total income while the richest 10% of the population earned 45.31% of the total national income. Ineqaulity is a historic problem for Brazil, but has improved in recent years. [18]

Current account balance: $8 billion (2004 est.)

Exports - commodities: transport equipment, iron ore, soybeans, footwear, coffee, autos

Imports - commodities: machinery, electrical and transport equipment, chemical products, oil

Reserves of foreign exchange & gold: $52.94 billion (2004 est.)