Brazil is the largest national economy in Latin America, the world's eighth largest economy and the eighth largest in purchasing power parity (PPP) according to the 2017 estimates. Brazil has a mixed economy with abundant natural resources. After rapid growth in preceding decades, the country entered an ongoing recession in 2014 amid a political corruption scandal and nationwide protests.
Its GDP (PPP) per capita was $15,919 in 2017 putting Brazil in the 77th position according to IMF data. Active in agricultural, mining, manufacturing and service sectors Brazil has a labor force of over a 107 million (ranking 6th worldwide) and unemployment of 6.2% (ranking 64th worldwide). The country has been expanding its presence in international financial and commodities markets, and is one of a group of four emerging economies called the BRIC countries. Brazil has been the world's largest producer of coffee for the last 150 years.
Brazil has become the fourth largest car market in the world. Major export products include aircraft, electrical equipment, automobiles, ethanol, textiles, , iron ore, steel, coffee, orange juice, soybeans and corned beef. In total, Brazil ranks 23rd worldwide in value of exports.
Brazil pegged its currency, the real, to the U.S. dollar in 1994. However, after the East Asian financial crisis, the Russian default in 1998 and the series of adverse financial events that followed it, the Central Bank of Brazil temporarily changed its monetary policy to a managed-float scheme while undergoing a currency crisis, until definitively changing the exchange regime to free-float in January 1999.
Brazil received an International Monetary Fund rescue package in mid-2002 of $30.4 billion, then a record sum. Brazil's central bank paid back the IMF loan in 2005, although it was not due to be repaid until 2006. One of the issues the Central Bank of Brazil recently dealt with was an excess of speculative short-term capital inflows to the country, which may have contributed to a fall in the value of the U.S. dollar against the real during that period. Nonetheless, foreign direct investment (FDI), related to long-term, less speculative investment in production, is estimated to be $193.8 billion for 2007. Inflation monitoring and control currently plays a major part in the Central bank's role of setting out short-term interest rates as a monetary policy measure.
Between 1993 and 2010, 7012 mergers & acquisitions with a total known value of $707 billion with the involvement of Brazilian firms have been announced. The year 2010 was a new record in terms of value with 115 billion USD of transactions. The largest transaction with involvement of Brazilian companies has been: Cia. Vale do Rio Doce acquired Inco in a tender offer valued at US$18.9 billion.
Corruption costs Brazil almost $41 billion a year alone, with 69.9% of the country's firms identifying the issue as a major constraint in successfully penetrating the global market. Local government corruption is so prevalent that voters perceive it as a problem only if it surpasses certain levels, and only if a local media e.g. a radio station is present to divulge the findings of corruption charges. Initiatives, like this exposure, strengthen awareness which is indicated by the Transparency International's Corruption Perceptions Index; ranking Brazil 69th out of 178 countries in 2012. The purchasing power in Brazil is eroded by the so-called Brazil cost.
Components and energy
Brazil's diversified economy includes agriculture, industry, and a wide range of services. Agriculture and allied sectors like forestry, logging and fishing accounted for 5.1% of the gross domestic product in 2007. Brazil is one of the largest producer of oranges, coffee, sugar cane, cassava and sisal, soybeans and papayas.
The industry – from automobiles, steel and petrochemicals to computers, aircraft and consumer durables – accounted for 30.8% of the gross domestic product. Industry is highly concentrated in metropolitan São Paulo, Rio de Janeiro, Campinas, Porto Alegre, and Belo Horizonte.
Brazil is the world's tenth largest energy consumer with much of its energy coming from renewable sources, particularly hydroelectricity and ethanol; the Itaipu Dam is the world's largest hydroelectric plant by energy generation. The first car with an ethanol engine was produced in 1978 and the first airplane engine running on ethanol in 2005. Recent oil discoveries in the Pre-salt layer have opened the door for a large increase in oil production. The governmental agencies responsible for the energy policy are the Ministry of Mines and Energy, the National Council for Energy Policy, the National Agency of Petroleum, Natural Gas and Biofuels, and the National Agency of Electricity.
Tourism in Brazil is a growing sector and key to the economy of several regions of the country. The country had 6.36 million visitors in 2015, ranking in terms of the international tourist arrivals as the main destination in South America and second in Latin America after Mexico. Revenues from international tourists reached US$6 billion in 2010, showing a recovery from the 2008–2009 economic crisis. Historical records of 5.4 million visitors and US$6.8 billion in receipts were reached in 2011.
Natural areas are its most popular tourism product, a combination of ecotourism with leisure and recreation, mainly sun and beach, and adventure travel, as well as cultural tourism. Among the most popular destinations are the Amazon Rainforest, beaches and dunes in the Northeast Region, the Pantanal in the Center-West Region, beaches at Rio de Janeiro and Santa Catarina, cultural tourism in Minas Gerais and business trips to São Paulo city.
In terms of the 2015 Travel and Tourism Competitiveness Index (TTCI), which is a measurement of the factors that make it attractive to develop business in the travel and tourism industry of individual countries, Brazil ranked in the 28st place at the world's level, third in the Americas, after Canada and United States.
Brazil's main competitive advantages are its natural resources, which ranked 1st on this criteria out of all countries considered, and ranked 23rd for its cultural resources, due to its many World Heritage sites. The TTCI report notes Brazil's main weaknesses: its ground transport infrastructure remains underdeveloped (ranked 116th), with the quality of roads ranking in 105th place; and the country continues to suffer from a lack of price competitiveness (ranked 114th), due in part to high ticket taxes and airport charges, as well as high prices and high taxation. Safety and security have improved significantly: 75th in 2011, up from 128th in 2008.
According to the World Tourism Organization (WTO), international travel to Brazil accelerated in 2000, particularly during 2004 and 2005. However, in 2006 a slow-down took place, and international arrivals had almost no growth in 2007–08.
In spite of this trend, revenues from international tourism continued to rise, from USD 4 billion in 2005 to 5 billion in 2007, despite 330 000 fewer arrivals. This favorable trend is the result of the strong devaluation of the US dollar against the Brazilian Real, which began in 2004, but which makes Brazil a more expensive international destination.
This trend changed in 2009, when both visitors and revenues fell as a result of the Great Recession of 2008–09. By 2010, the industry had recovered, and arrivals grew above 2006 levels to 5.2 million international visitors, and receipts from these visitors reached USD 6 billion. In 2011 the historical record was reached with 5.4 million visitors and US$6.8 billion in receipts.
Despite continuing record-breaking international tourism revenues, the number of Brazilian tourists travelling overseas has been growing steadily since 2003, resulting in a net negative foreign exchange balance, as more money is spent abroad by Brazilians than comes in as receipts from international tourists visiting Brazil.
Tourism expenditures abroad grew from USD 5.8 billion in 2006, to USD 8.2 billion in 2007, a 42% increase, representing a net deficit of USD 3.3 billion in 2007, as compared to USD 1.5 billion in 2006, a 125% increase from the previous year. This trend is caused by Brazilians taking advantage of the stronger Real to travel and making relatively cheaper expenditures abroad. Brazilians traveling overseas in 2006 represented 4% of the country's population.
In 2005, tourism contributed with 3.2% of the country's revenues from exports of goods and services, and represented 7% of direct and indirect employment in the Brazilian economy. In 2006 direct employment in the sector reached 1.9 million people.
Domestic tourism is a fundamental market segment for the industry, as 51 million people traveled throughout the country in 2005, and direct revenues from Brazilian tourists reached USD 22 billion, 5.6 times more receipts than international tourists in 2005.
In 2005, Rio de Janeiro, Foz do Iguaçu, São Paulo, Florianópolis and Salvador were the most visited cities by international tourists for leisure trips. The most popular destinations for business trips were São Paulo, Rio de Janeiro and Porto Alegre. In 2006 Rio de Janeiro and Fortaleza were the most popular destinations for business trips.