Issue 6/2009
11/02/09
Report about Brazil Market Industry
Brazil has the second biggest industrial sector in the Americas. Accounting for 28.5 % of GDP, Brazil‘s diverse industries range from automobiles, steel and petrochemicals to computers, aircraft, and consumer durables. With increased economic stability provided by the Plano Real , Brazilian and multinational businesses have invested heavily in new equipment and technology, a large proportion of which has been purchased from U.S. firms.
Category: Issue 6/2009
Posted by: Editor
Brazil has a diverse and relatively sophisticated services industry as well. During the early 1990s, the banking sector accounted for as much as 16 % of the GDP. Although undergoing a major overhaul, Brazil‘s financial services industry provides local businesses with a wide range of products and is attracting numerous new entrants, including U. S. financial firms. The São Paulo and Rio de Janeiro stock exchanges are undergoing a consolidation and the previously monopolistic reinsurance sector is being opened up to third party companies.
As of 31 December 2007, there were an estimated 21,304,000 broadband lines in Brazil. Over 75 % of the broadband lines were via DSL and 10 % via cable modems.
Proven mineral resources are extensive. Large iron and manganese reserves are important sources of industrial raw materials and export earnings. Deposits of nickel, tin, chromite, uranium, bauxite, beryllium, copper, lead, tungsten, zinc, gold, and other minerals are exploited. High-quality cooking-grade coal required in the steel industry is in short supply.
Largest companies
In 2008, 34 Brazilian companies were listed in the Forbes Global 2000 list – an annual ranking of the top 2000 public companies in the world by Forbes magazine. The 10 leading companies are:
Energy
The Brazilian government has undertaken an ambitious program to reduce dependence on imported oil. Imports previously accounted for more than 70 % of the country‘s oil needs but Brazil became energy independent in 2006. Brazil is one of the world‘s leading producers of hydroelectric power, with a current capacity of about 108,000 megawatts. Existing hydroelectric power provides 80 % of the nation‘s electricity. Two large hydroelectric projects, the 15,900 megawatt Itaipu Dam on the Paraná River (the world‘s largest dam) and the Tucurui Dam in Pará in northern Brazil, are in operation. Brazil‘s first commercial nuclear reactor, Angra I, located near Rio de Janeiro, has been in operation for more than 10 years. Angra II was completed in 2002 and is in operation too. An Angra III is almost completed, planned inauguration end of 2009. The three reactors would have combined capacityof 9,000 megawatts when completed. The government also plans to build 17 more nuclear plants by the year 2020.
Economic status
„In Brazil a labor-union leader has presided over an amazing period of social and economic progress. It is also one of the few countries that have successfully managed to reduce economic inequality at a time when everywhere else inequities are deepening. Successive Brazilian governments, of rival political parties, have succeeded in improving education, health and the living standards of millions of impoverished citizens who have now joined a growing middle class. Brazil has an energy policy that has spawned the world‘s most vibrant biofuelsindustry. In 1995, 15 percent of Brazilian school-age children did not go to school. In 2005, this fell to 3 percent, and today Brazil has practically achieved universal basic education.“
Moisés Naím, Newsweek, June 2009
Sustainable growth
After being discovered by Portugal in 1500, it was only in 1808 that Brazil obtained a permit from the Portuguese colonial government to set up its first factories and manufacturers. In the 21st century , Brazil reached the status of 8th largest economy in the world. If at the beginning the export list was basically raw and primitive goods, such as sugar, rubber and gold, today 84 % of exports consists of manufactured and semi-manufactured products.
The period of great economic transformation and growth occurred between 1875 and 1975.
In the last decade, domestic production increased by 32.3 % and agribusiness (agriculture and cattle-raising), which grew by 47 % or 3.6 % per year, was the most dynamic sector – even after having weathered international crises that demanded constant adjustments to the Brazilian economy.
Control and reform
Among measures recently adopted in order to balance the economy, Brazil carried out reforms to its Social security (state and retirement pensions) and Tax systems. These changes brought with them a noteworthy addition: a Law of Fiscal Responsibility which controls public expenditure by the Executive Branches at federal, state and municipal levels. At the same time, investments were made towards administration effi ciency and policies were created to encourage exports, industry and trade, thus creating “windows of opportunity” for local and international investors and producers.
With these alterations in place, Brazil has reduced its vulnerability: it doesn‘t import the oil it consumes; it has halved its domestic debt through exchange ratelinked certificates and has seen exports grow, on average, by 20 % a year. The exchange rate does not put pressure on the industrial sector or infl ation – at 4 % a year –, and does away with the possibility of a liquidity crisis. As a result, the country, after 12 years, has achieved a positive balance in the accounts which measure exports/imports, plus interest payments, services and overseas payment. Thus, respected economists say that the country won‘t be deeply affected by the current world economic crisis http://brazil.melhores. com.br/Betting on Brazil.
Consistent policies
Support for the productive sector has been simplified at all levels; active and independent , Congress and the Judiciary Branch carry out the evaluation of rules and regulations. Among the main measures taken to stimulate the economy are the reduction of up to 30 % on Manufactured Products Tax (IPI), and the investment of $ 8 billion on road cargo transportation fleets, thus improving distribution logistics. Further resources guarantee the propagation of business and information telecenters.
The Policy for Industry, Technology and Foreign Trade, at the forefront of this sector, for its part, invests $ 19.5 billion in specific sectors, following the example of the software and semiconductor, pharmaceutical and medicine product, and capital goods sectors.
6/2009
