Brazil: Economic and Political Overview
In this page: Economic Outline | Political Outline | COVID-19 Country Response
Brazil is the world's ninth-largest economy. The country is still working on rebuilding itself after the recession that happened nine years ago when the economy contracted by almost 7%. Since then, Brazil hasn’t been able to grow at the same pace it was used to during the decade before the recession hit. Nevertheless, the Brazilian economy has been experiencing a slow but steady recovery in recent years. After growing by 2.9% in 2022, the first half of 2023 saw a robust recovery in economic activity, driven by an exceptional agricultural harvest and resilient household spending. Consumer spending continued to remain strong in the second half, bolstered by a robust labour market, while investment has declined, indicating a heightened sensitivity to the high-interest rate environment. For the year as a whole, the IMF estimated growth at 3.1%. As agricultural exports will have a lower impact in the years to come, GDP growth is expected to decelerate to 1.5% this year and 1.9% in 2025.
In 2023, Brazil experienced a significant decline in its fiscal position due to slow revenue growth, substantial expenditure hikes primarily linked to the expansion of Bolsa Familia social benefits, and the resolution of outstanding court-ordered "precatorio" payments. Fitch projected that the central government's primary balance deteriorated to a 2.2% GDP deficit from a 0.5% surplus in 2022. The broader general government primary balance also worsened to a 2% deficit in 2023 from a 1.2% surplus in 2022 due to a shrinking primary surplus among subnational governments. This, combined with a somewhat larger interest bill, elevated the overall deficit to around 8%. The 2024 budget aims for a federal primary balance of 0% of GDP. However, achieving this goal seems increasingly difficult given the uncertainties surrounding revenues and spending. The government debt-to-GDP ratio has resumed an upward path in 2023, reaching 88.1% from 85.3% one year earlier (IMF), which should continue over the forecast horizon, with debt standing at around 92.4% of GDP by 2025. Inflation declined markedly over 2023, averaging 4.5%, allowing the central bank to ease monetary policy, reducing the policy rate from 13.75% in July to 12.25% by November 2023.
The labour market has shown signs of improvement, with the unemployment rate dropping to 7.7% in September 2023, the lowest level recorded since June 2015. Job growth was primarily driven by the services sector, particularly domestic services. However, the government believes that the real figures are significantly higher, as it is estimated that almost two-fifths of the country's employed workforce, have informal jobs. The IMF expects the unemployment rate to remain stable this year and the next. Overall, the country continues to face social issues and has one of the highest levels of inequality in the world, with high disparities between the country's regions. Even though Brazil has lifted 28 million people out of poverty in the last 15 years, 10% of the population still lives in poverty, while the country's richest 5% have the same income as the remaining 95% of the population.
| Main Indicators | 2022 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 1,951.85 | 2,173.67 | 2,331.39 | 2,437.91 | 2,596.12 |
| GDP (Constant Prices, Annual % Change) | 3.0 | 2.9 | 2.2 | 2.1 | 2.1 |
| GDP per Capita (USD) | 9,612 | 10,642 | 11,352 | 11,809 | 12,510 |
| General Government Balance (in % of GDP) | -6.3 | -8.0 | -7.2 | -5.7 | -5.4 |
| General Government Gross Debt (in % of GDP) | 83.9 | 84.7 | 86.7 | 89.3 | 90.9 |
| Inflation Rate (%) | 9.3 | 4.6 | 4.1 | 3.0 | 3.1 |
| Unemployment Rate (% of the Labour Force) | 9.3 | 8.0 | 8.0 | 7.9 | 7.7 |
| Current Account (billions USD) | -48.25 | -28.62 | -31.90 | -35.74 | -44.72 |
| Current Account (in % of GDP) | -2.5 | -1.3 | -1.4 | -1.5 | -1.7 |
Source: IMF – World Economic Outlook Database, Latest data available.
Note : (E) Estimated data
Brazil has abundant natural resources and a relatively diversified economy. The country is the world's largest producer of coffee, sugar cane and oranges, and is one of the world’s largest producers of soya. With forests covering half of the country and the world’s largest rainforest, Brazil is the world’s fourth-largest exporter of timber. Additionally, Brazil is home to the world’s largest commercial livestock heard. The country also attracts many multi-national groups in the food and bio-fuels industries. Still, even though agriculture represents around 40% of exports, it contributes relatively little to the GDP (6.8%) and only employs 10% of the population. According to FAO, the 2023 maize crop production was officially estimated at a record high of 102 million tonnes, more than 40% above the previous five-year average, while for wheat it was forecast at 10.8 million tonnes, near the 2022 record level.
Brazil is also a large industrial power and has benefited greatly from its mineral ore wealth. The country is the world’s second-largest exporter of iron and one of the world’s main producers of aluminium and coal. As an oil producer, Brazil is aiming to become energy independent in the near future, with reserves that could make it one of the top five oil producers in the world. Furthermore, the country is increasingly asserting itself in the textile, aeronautics, pharmaceutical, automobile, steel and chemical industry sectors. Many of the world’s large automobile manufacturers have set up production plants in Brazil. Overall, the industry sector contributes 20.7% to the GDP and employs 21% of the population. According to the Brazilian Institute of Geography and Statistics, industrial production increased by only 0.3% in 2023, with the sectors affected by credit availability – namely automotive, IT, electronics, and machinery – recording worse performances.
The service sector represents 58.9% of Brazilian GDP and employs 70% of the active workforce. In recent years, the country has embarked on the production of high added-value services, especially in the fields of aeronautics and telecommunications. Tourism has also been on the rise in recent years, making it an important segment of the sector. Even though the services sector was hit the hardest during the pandemic, it showed a significant recovery in 2022, with growth reaching pre-pandemic levels. The sector's recovery was mainly driven by services to families, information and communication, and transport, as well as a gentle bounce of the tourism industry.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 9.7 | 20.6 | 69.7 |
| Value Added (in % of GDP) | 6.8 | 20.7 | 58.9 |
| Value Added (Annual % Change) | -1.7 | 1.6 | 4.2 |
Source: World Bank, Latest data available.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2021-2025
See the country risk analysis provided by Coface.
The main parties by number of seats in Congress are:
- Social Liberal Party (PSL): far-right, conservative, nationalist, militarist, liberal, anti-communism, anti-feminism, anti-LGBTQI+, populist.
- The Worker's Party (PT): centre-left, social democratic. Party with the highest number of elected representatives throughout the country since 2003.
- The Liberal Party (PL): formerly known as the Party of the Republic (PR). Centre-right to right, liberal, conservative, Christian democracy.
- The Progressive Party (PP): right-wing, nationalist, conservative.
- Social Democratic Party (PSD): big-tent party, centrist, liberal, Christian democracy.
- The Democratic Movement Party (MDB): big-tent party, centrist, liberal, conservative.
- The Brazilian Social Democracy Party (PSDB): centre, social-democratic, liberal, conservative.
- The Brazilian Socialist Party (PSB): centre-left to left-wing, social-democratic, economic nationalism, state interventionism.
- Republicans: right-wing, conservative, Christian democracy.
- Democratic Labour Party (PDT): centre-left, social-democratic, labourism.
- Solidarity (SDD): left-wing, social-democratic, labourism.
- Podemos (PODE): centre-right to right, nationalist, populist.
- Socialism and Liberty Party (PSOL): left-wing to far-left, social-democratic, anti-capitalist, environmentalist.
- Forward (Avante): centre, Third Way, populism.
- New Party (NOVO): centre-right to right-wing, liberalism.
- Communist Party of Brazil (PCdoB): left-wing, Communism, Marxism–Leninism.
- Citizenship (PSDB-Cidadania): centre to centre-left, social liberalism, Third Way.
- Patriot (Patriota): right-wing to far-right, social conservatism, economic liberalism, militarism.
- Green Party (PV): centre to centre-left, social-democratic, environmentalist, green politics.
- Sustainability Network (REDE): centre to centre-left, green politics, progressivism, environmentalism.
- The Brazil Union (União Brasil): liberal-conservative, formed through the merger of the Democrats (DEM) and the Social Liberal Party (PSL).
- The Democratic Renewal Party (PRD): a fusion of Patriota and the Brazilian Labour Party (PTB)
In the latest election, the Brazil of Hope Federation (FE Brasil), an electoral and parliamentary group formed by the Workers' Party (PT), Communist Party of Brazil (PCdoB) and Green Party (PV), obtained the majority of the seats.
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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