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COUNTRY PROFILES


PROFILE

Did You Know?

-- Brazil is larger than the continental US and Australia. It is the fifth largest country in the world. With a population of 195 million, Brazil is also the fifth most populous country and fourth largest democracy. Sao Paulo is the second most populous city in the world, with almost 11 million people and nearly 22 million in the metropolitan area. Brazil is also one of the most unequal societies. 5% of the population own 85% of the wealth.

-- Brazil is the world's largest exporter of iron ore and soya; it will soon be the largest exporter of frozen meat. Brazilian industry produces more cars than Mexico, more steel than Italy, the same amount as India.

-- Brazil is technically self-sufficient in oil and if recently discovered reserves are all proven, is likely to become a major oil exporter in the future.

-- Brazil is the country outside the G8 with the best science base (as measured by the frequency its scientific papers are quoted).

-- Brazil has the world's largest reserves of tropical forest, freshwater and of bio-diversity. Enough water flows out of the Amazon each day to keep New York City going for 10 years.

Environment and Climate Change

Brazil is the 4th largest global emitter of greenhouse gases, 75% of which results from land-use change, in particular deforestation. 18% of the Brazilian Amazon has been deforested since 1970 (an area three times the size of the UK) at an average rate of around one Wales every year. In May 2011, Brazil’s space agency (INPE) released deforestation figures from its satellite monitoring system. The figures showed that deforestation in March and April 2011 was six times higher than in 2010 and that deforestation from August 2010-April 2011 had increased by 27% on the same period the year before. Environment Minister Teixeira has launched an emergency response. Brazil is aiming to reduce deforestation by 80% by 2020.

The country is one of the most biodiverse in the world. Its six major biomes—Amazon rainforest, wetlands (including the world’s largest inland wetland, the Pantanal), semi-arid areas (caatinga), savannah (cerrado), Atlantic forest and marine and coastal areas—are home to between 20 and 30% of world’s biodiversity—1,300 species of fish (12 to 15 times the number found in Europe), more than 1,000 species of birds, more than 400 mammals, and 30,000 plants (10% of the world’s total). The Amazon represents over half of the world’s remaining rainforest (8.5 million square kilometres) and contains one fifth of the world’s freshwater. Brazil has 3.5 million square km of coastal and marine waters. Biodiversity is of economic importance—it provides ecosystem services: clean water, fertile soil and regional rainfall, as well as regulating the climate. It is also a potential source of pharmaceutical products and cultural and spiritual significance to Brazil’s people which include over 200 indigenous groups.

Brazil hosted the UN Conference on Environment and Development in 1992 (UNCED, the Rio Earth Summit) and played a key role in the World Summit on Sustainable Development in South Africa (referred to as Rio plus 10 by Brazilians), especially in the area of renewable energy. Brazil will host the Rio plus 20 Summit in June 2012. Brazil is a world leader in the production of biofuels, bio-ethanol in particular. 46% of its energy is produced from renewable sources.

Despite this, incidences of environmental degradation remain high. The environment is a complex political issue in Brazil. This is partly due to Brazil’s growing commercial significance, but also to conflicting pressures resulting from poverty, social inequality and developmental needs. Brazil also suffers from corruption, red tape and a shortage of resources for policy implementation.

Brazil plays a crucial and active role in international negotiations on climate change, and was behind the original concept of a Clean Development Mechanism (CDM). It is also active in building partnerships on biofuels
fuels.

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ECONOMY

Basic Economic Facts

GDP: US$2.1trillion (2010)
GDP per head (PPP): US$11,239 (2010)
Annual Growth: 7.5% (2010),
Inflation: 5.9% (2010)
Major Industries: Agriculture (soya meat, sugar, fruit, vegetables), iron ore and minerals, iron and steel, oil and derivatives, food processing, wood products, footwear and textiles, automotive, aerospace, petrochemicals, financial services, electronics
Major trading partners: China, United States, Argentina, Germany, Japan, Netherlands, South Korea, and the United Kingdom.

ECONOMIC AND TRADE OVERVIEW

On 26 December 2011, the Centre for Economics and Business Research (CEBR) published its annual World Economic League Table. Based on its forecasts for GDP growth, the CEBR estimates that by the end of 2011 the Brazilian economy will have overtaken the UK economy to become the 6th largest in the world with GDP of over US$2.5 trillion. Latest IMF forecasts suggest Brazil should also overhaul France to become the 5th largest economy by 2015. It is a diversified middle income economy, but with wide variations in development levels. Most large industry is agglomerated in the South and Southeast. The Northeast is the poorest region of Brazil, but it is beginning to attract new investment. Brazil has a history of economic boom and bust, where high inflation and foreign debt have hampered its development. Economic reforms in the 1990s, however, helped to bring stability to the country's finances. These reforms included the launch of a new currency (the Real) to tackle inflation, the adoption of inflation targeting, an extensive programme of privatisation and a focus on fiscal discipline.

Brazil weathered the global economic crisis well, with a small economic contraction of 0.6% in 2009, followed by impressive growth of around 7.5% in 2010, the fastest rate since 1986. Over the medium term, strong domestic demand, favourable demography and plentiful natural resources sees forecast growth averaging 4.2% a year. Brazil’s economy is sophisticated, with a well developed manufacturing sector. However, growing concentration of exports in commodities, due to high commodity prices and increased commodity demand from China, has led some analysts to warn of over dependence on primary products. The high level of domestic consumption in Brazil, at 62% of GDP in 2009, is usually associated with developed economies. Brazil has had an ambitious social development and poverty reduction agenda, and it has a large and growing middle class. Some 50 million are forecast to enter the ‘middle class’ between 2000 and 2015, and 30 million had done so by 2008. Income inequality is still high (though declining): the share of income of the top fifth of the population is more than 19 times that of the bottom fifth, comparing unfavourably with others in Latin America, for example Mexico (14 times). Some 16.2 million live in extreme poverty in Brazil, using the Government’s 70 reais benchmark (around £27 a month).

Annual headline inflation in 2010 was 5.9%, well above the 4.5% centre point of Brazil’s inflation target, but within the +/- 2% target band. Inflation in 2011 is rising rapidly and has passed the upper boundary of the target band. Both the Treasury and the Central Bank are adopting economic measures to bring the inflation rate back to the target band, including raising interest rates. However, higher rates encourage further appreciation of arguably the most overvalued major currency. There were 4 reais to the US dollar around 2000, and it has grown steadily stronger since, reaching 1.6R/$ in June 2011.

Brazil has relatively little foreign debt. In December 2005 Brazil re-paid its IMF debt (US$15.5bn) - two years ahead of schedule, saving US$900 million in interest payments. It has also fully re-paid its Paris Club obligations to the UK, and retired all of its Brady Bonds, again ahead of schedule. Brazil has international reserves in excess of US$200 billion and in June 2009, Brazil announced that it would lend US$10 billion to the IMF.

The Brazilian Government remains committed to tackling its high public sector net debt/GDP ratio (of around 40 %). However, public spending remains high and fundamental structural reforms, including of the taxation and social security systems, are widely acknowledged as impediments to growth. Investment has historically been low but the Government’s Accelerated Growth Plan (PAC), launched in January 2007, aims to rectify this.

Mercosul and UNASUL

Brazil is a founder member of Mercosul, (the Southern Cone Common Market – known as Mercosur to its Spanish speaking members) along with Argentina, Paraguay, Uruguay and Venezuela. Bolivia, Chile, Peru, Ecuador and Colombia are currently Associate Members although discussions are underway regarding Bolivia's request for full membership. Mercosul is the world's fourth-biggest integrated market and represents 75% of South America’s GDP. Mercosul has been successful in promoting increased trade among its members as well as with the outside world. In recent years, however, regional economic instability has slowed the integration process. Negotiations over an EU-Mercosul agreement have yet to be concluded. Brazil is also a key member (and instigator) of UNASUL, the Union of South American Nations which was formally created in May 2008. The grouping, originally called the Community of South American Nations (CASA), was proposed by President Lula in 2004 with the aim of promoting regional integration. In effect, UNASUL combines the countries of Mercosul with those from the Community of Andean Nations (CAN), along with Chile, Guyana and Suriname into a wider regional integration project.

Mercosul Secretariat (http://www.mercosur.org.uy/)
European Commission - EU's relations with Mercosur (http://europa.eu.int/comm/external_relations/mercosur/intro/)

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HISTORY

There are various theories explaining the origins of Brazil's indigenous population. One of the most accepted westernised theories is that they migrated from Asia via the Bering Strait 15-25,000 years before the arrival of the Europeans. Recently, some Brazilian archaeologists have proposed that there was human settlement in Brazil 20,000 years earlier than was initially thought. Subsequent settlement of what is now Brazilian territory has been understood in terms of linguistic and cultural assemblages, with a proposed Amazonian group in the north of Brazil (Amazon Basin) and a second group in the south and coastal areas commonly identified as the Tupi group.

1500 The Portuguese explorer Pedro Alvares Cabral lands in Brazil.
1572 The King of Portugal creates the Viceroyalty of Brazil in Salvador (Bahia).
1763 Rio de Janeiro proclaimed Brazil's sole Capital.
1789 First independence movement (Minas Gerais)
1807 Napoleon invades Portugal. The Portuguese Regent (later King Dom Joao VI) takes refuge in Brazil.
1821 King Joao VI returns to Portugal leaving his son Pedro as Regent of Brazil.
1822 Pedro declares the independence of Brazil and is proclaimed Emperor.
1831 Dom Pedro I returns to Portugal, leaving Brazil to be governed by a regency.
1840 Pedro II crowned Emperor at the age of 14.
1888 Abolition of slavery.
1889 Brazil is proclaimed a Republic.
1937-45 President Getúlio Vargas' authoritarian regime launches the process of industrialisation.
1944-45 Brazilian troops fight alongside Allies in World War II.
1960 Brasilia becomes the new capital.
1964 Military coup topples democratic regime.
1985 Democracy is restored. Jose Sarney becomes President.
1988 New constitution proclaimed.
1994 Fernando Henrique Cardoso (PSDB) elected President, and re-elected in 1998.
2002 Luiz Inacio Lula da Silva elected President.
2006 Luis Inacio Lula da Silva re-elected as President.
2010 Dilma Vana Rouseff (PT) elected as the first female president

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BRAZIL'S INTERNATIONAL RELATIONS

Brazil is a key player on the world stage. It is at the forefront of efforts to deepen Latin American integration, through its membership of Mercosul, the Rio Group, ALADI and other regional groupings. It was a driving force behind the founding of the South American Community of Nations in December 2004 (which was later renamed the Union of South American Nations). Brazil founded, and plays, a co-ordinating role in the G20 group of nations in WTO negotiations. It is an active and influential member of the United Nations. Brazil leads the UN peacekeeping force in Haiti (MINUSTAH) and participates in the multinational presence in Timor Leste. It is the largest member of the community of Portuguese-speaking nations (CPLP).

Under both Presidents Lula and Dilma, Brazil has been particularly active in its engagement with other emerging powers, particularly India, South Africa, China and Russia. Brazil, India and South Africa have established a more formal grouping, called the G3 or IBSA, and co-ordinate activity across various areas. Through its role as a leader within Latin America, Brazil has encouraged closer co-operation between the region and the Middle East. Africa was also a stated priority of President Lula's administration, reflected by in high-level visits and an expansion of Brazil's diplomatic representation in Africa.

Brazil supports reform of the United Nations, both the Security Council and more widely. Brazil has put itself forward as a candidate for a permanent seat in an enlarged Security Council and has the stated support of a significant number of countries, including the UK. Alongside India, Japan and Germany, Brazil has formed a group to co-ordinate and lobby in support of their respective candidatures.

Brazil's Relations with the UK

Brazil is a rapidly emerging global player of great importance to British interests - economic, political and commercial. A prosperous, export-orientated Brazil would be one of the biggest global suppliers of agricultural products and raw materials, the foremost regional producer of manufactures and a major market for profitable British trade and investment. Brazil is also a key country for climate change, sustainable development and bio-diversity.

The UK and Brazil have a broad, deep and sustained relationship. The UK was an early supporter of Brazil's independence in the nineteenth century, helped found the Brazilian navy, built railways, and encouraged Brazil to abolish slavery. There are still small long-term British communities and significant British investments. In the twenty-first century Brazil is a key partner of the UK on a wide range of global issues from combating drugs trafficking to promoting an open and expanding global economy, and sustainable development underpinned by democracy, good governance and human rights.

The Brazil and UK share a unique opportunity this decade, as adjacent hosts of the London 2012 and Rio 2016 Olympic and Paralympic Games, to further bilateral realtions through sport. Brazil will also host the 2014 FIFA World Cup.

Cultural Relations with the UK

The British Council has been helping to bring together the people and organisations of Brazil and the UK since 1945. It celebrated 60 years in Brazil in 2005. It is the United Kingdom's international and educational relations organisation.

The British Council works to develop stronger ties and greater mutual understanding between the UK and Brazil as well as seeking to improve the perceptions of the UK throughout Brazil. There are presently around 70 staff working at British Council offices in Brasilia, Rio de Janeiro, Sao Paulo, Recife and Curitiba. Its work includes promoting creativity in the arts and sciences, all facets of education and English language learning support, and aspects of governance and society such as judicial reform and development of regulatory frameworks of government.

British Council, Brazil (http://www.britishcouncil.org/br/brasil.htm)

Recent Inward Visits

2011

-- July 2011, Brazilian Defence Minister, Nelson Jobim

2010

-- October 2010, Brazilian Foreign Minister, Antonio Patriota

2009

-- November 2009, Former President Lula, accompanied by Minister of External Relations, Celso Amorim, Chief of Staff Dilma Rousseff, Minister of Finance Guido Mantega, Minister of Development Industry and Foreign Trade Miguel Jorge, Governor of the Central Bank of Brazil Henrique Meirelles, Special Secretary for Social Communication Franklin Martins and President of BNDES Luciano Coutinho.

Recent Outward Visits

2011

-- April 2011, Caroline Spelman, Secretary of State forEnvironment, Food and Rural Affairs.

-- April 2011, Gerald Howarth, Minister forInternational Security and Strategy.

-- April 2011, Baroness Neville-Jones, Minister of State for Security.

-- May 2011, Jeremy Browne, Minister of State forForeign and Commonwealth Office.

May 2011, the Lord Mayor of London.

-- May 2011, the Foreign Affairs Parliamentary Committee.

-- June 20011, the Deputy Prime Minister, accompanied by Secretary of State for Culture, Jeremy Hunt, Minister of State for Trade and Investment Lord Green, Minister of State for Universities and Science David Willets, and Minister of State for Foreign and Commonwealth Affairs Jeremy Browne.

2010

-- August 2010, Secretary of State for Business Vince Cable.

-- September 2010, Gerald Howarth, Minister for International Security and Strategy.

-- March 2010, Tessa Jowell, Secretary of State for Culture.

2009

-- November 2009, Hilary Benn, Secretary of State for Environment, Food and Rural Affairs

-- August 2009, Ed Miliband, Secretary of State for Energy and Climate Change

March 2009, Gordon Brown, Former Prime Minister

-- March 2009, HRH the Prince of Wales

-- February 2009, Lord Malloch Brown and Stephen Timms (HMT)

2008

-- March 2008, Kim Howell, Minister of State for Foreign and commonwealth Affairs

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GEOGRAPHY

Brazil is the fifth largest country in the world. It is framed by 2 of the world's largest river systems: the Amazon in the North, and the Paraná river in the South. The Amazon basin covers some 60% of Brazil's surface, and holds 20% of the world's fresh water supply. It has the world's largest rain forest but also includes savannah and wetlands. Like the Amazon, the Paraná flows through several neighbouring countries. It drains the world's largest swampland, the Pantanal in West-Central Brazil. The Brazilian Highlands form the rest of the country, except for a coastal strip some 9,000km long. Brazil contains a number of climatic zones from the Amazon region where the temperature averages 27ºC, to the dry Northeast where temperatures can exceed 40ºC, to the south near Uruguay where average temperatures are 17-19ºC.

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TRADE AND INVESTMENT

Trade and Investment with the UK

The UK enjoys a strong and historic trading relationship with Brazil, stretching back over 200 years. Today Brazil is the UK's most important trading partner in Latin America. Bilateral trade in goods between the UK and Brazil was £5.2 billion in 2010. UK goods exports of £2.2 billion were up almost a quarter on the previous year, and Brazil’s share of total UK exports also rose slightly. Bilateral trade in services between the UK and Brazil was £924 million in 2009. The UK exported £615 million and imported £309 million.

Currently, around 70% of UK exports to Brazil are manufactured goods. Top goods exports include organic chemicals, pharmaceutical products, power generation machinery and equipment, iron and steel, and road vehicles. Brazil's main goods exports to the UK are gems and stones, iron ore, oil, soya and meat and meat preparations.

The UK is also a leading investor in Brazil. The UK had a 7.5% share of investment into Brazil in 2009. BG Group is to invest $30 billion in oil and gas exploration over the next 10 years (the largest planned foreign company investment). BP will invest $680 million, its largest alternative energy business deal to date, in a Brazilian bio-ethanol producer.
UK Trade & Investment Country Profile: Brazil (http://www.uktradeinvest.gov.uk/ukti/brazil)
British Consulate General, Sao Paulo - Trade & Investment information (http://www.britishembassy.gov.uk/servlet/Front?pagename=OpenMarket/Xcelerate/ShowPage&c=Page&cid=1057658577791)

UK Development Assistance

The UK is committed to strengthening economic, industrial and commercial ties with Brazil. With this aim in mind, the two countries have created a Joint Economic Trade Committee (JETCO) to help promote and develop trade, address barriers and to create a more favourable business environment. The JETCO marks a step change in UK-Brazil bilateral trade and investment activity. The agenda for the JETCO’s fourth year was built around the following key themes.

-- Strengthening co-operation and promoting key trade sectors

Encouraging innovation

-- Promoting co-operation in financial services

-- Doing business and developing business environments

-- Sharing knowledge and raising profile

Promotion private sector collaboration

The next round of JETCO will take place on 6 September 2011. Doing business in Brazil can seem daunting for those new to the market. It can present challenges in practical areas such as communications, travel, product delivery and after sales services. However, Brazil is one of the most promising and exciting major developing markets.

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POLITICS

Brazilian politics since the end of the military regime in 1985 have been characterised by a multiplicity of political parties. Many do not have a strong ideological foundation or detailed policy platforms, and are built around shifting small groups of high-profile politicians. In recent years, four main parties have come to dominate the political landscape: the PSDB (Brazilian Social –Democratic Party); the PT (Worker’s Party); the PMDB (Brazilian Democratic Movement Party); and the DEM (Democrats).

The PSDB's candidate, Fernando Henrique Cardoso, won the presidential elections in 1994, and was re-elected in 1998. The centre-left PSDB (Brazilian Social-Democratic Party) remains important across the country and governs the state of Sao Paulo – the most populous and wealthy state in the country. Their Presidential candidate, José Serra (a former Governor of Sao Paulo), was the main rival to incumbent Dilma Rouseff in the 2010 elections.

The then President Lula, one of the founders and the most charismatic leader of the PT party, won the 2006 Presidential elections and managed to transfer his electoral capital to Dilma Rouseff. Since reinstatement of democracy in Brazil this was the first time Lula had not run for the presidential election. Dilma’s election represented a vote for continuity – particularly in taking forward Brazil’s social agenda. PT put pro-poor policies at the top of their agenda, whist also continuing its predecessor’s commitment to IMF targets and fiscal discipline.

The 2010 Presidential elections were taken to a second round. However, Dimla beat José Serra with over 60% of the vote. Dilma’s campaign motto was to finish poverty in Brazil with a more equal wealth distribution.

Serious corruption accusations involving Dilma’s predecessor in the Household Ministry played a big part to take the elections to a second round. The next Presidential elections are due to be held in October 2014.

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HUMAN RIGHTS

The Brazilian Government is committed to protecting human rights. Brazil's first National Plan for Human Rights was unveiled in 1996 and a National Secretariat for Human Rights was created in 1997 - there are also Special Secretaries for Women's Rights and the Promotion of Racial Equality. Principle human rights concerns in Brazil include police violence and impunity, prison conditions, access to legal advice, violence and discrimination against both indigenous communities and landless people, human trafficking, major deficiencies in the realisation of children’s rights, torture, working conditions and corruption with relative impunity for those involved.

The Government has introduced a number of programmes, for example, Bolsa Familia, the Zero Hunger programme and the Programme for the Eradication of Slave Labour. Human rights is a key aspect of the UK's dialogue with the Brazilian Government. FCO funding is being used to support projects on combating torture and reporting on the UN Child Rights Convention.

President Dilma has made improvements in domestic human rights a priority of her leadership.

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Last Updated: December 2011

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