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Country Forecast Brazil

  • ID: 2138637
  • Country Profile
  • Region: Brazil
  • 50 Pages
  • The Economist Intelligence Unit
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Background: A new constitution was ratified in 1988 after more than 20 years of military rule. The government of Fernando Henrique Cardoso (1995-2002) ended hyperinflation and advanced reforms to liberalise the economy. Under Luiz Inácio Lula da Silva (2003-10), Brazil reaped the benefits of the reforms and enjoyed a consumer-led boom, owing to jobs growth, minimum-wage rises and credit, all fuelled by the windfall from the commodities boom. But when this cycle ended, discontent over a weak economy, corruption and poor public services led to street protests in mid-2013. Dilma Rousseff won a second four-year term in October 2014, but lost congressional support and was impeached in August 2016 over budget irregularities. Her former vice-president, Michel Temer, of the centrist Movimento Democrático Brasileiro, took over for the rest of the term, which ends in December 2018.

Political structure: The president executes policy approved by the 513-seat Chamber of Deputies (the lower house) and the 81-seat Senate (the upper house). Constitutional review is conducted by an independent judiciary. Although the president can resort to temporary decrees to push through legislation, the constitution gives Congress ample scope to frustrate the executive. About 30 political parties are represented in the lower house, and party discipline has traditionally been weak.

Policy issues: Brazil's 1988 constitution established benefits and entitlements that have contributed to a doubling in central government spending since then, to over 20% of GDP. Congress has approved a federal spending cap and is expected to approve complementary social security reforms to stop the rise in the public debt/GDP ratio (74% in 2017) that has been caused by undisciplined fiscal policies and the impact of economic recession under the administration of Ms Rousseff. The Banco Central do Brasil (the central bank) cut the Selic policy rate from 14.25% in October 2016 to 6.5% in March 2018.
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Country Forecast Brazil

Brazil--highlights: Political outlook

Brazil--highlights: Business environment outlook

Brazil--highlights: Economic outlook

Brazil--highlights: Demographic outlook

Brazil--highlights: Market opportunities

Brazil--highlights: Long-term outlook

Fact sheet

Political outlook: Political forces at a glance

Political outlook: Political stability

Political outlook: Political and institutional effectiveness
Governments hampered by party fragmentation and weak coalitions
Major corruption schemes discredit the political system
Major political reforms unlikely before elections in October 2018

Political outlook: Election watch

Political outlook: International relations

Business environment outlook: Business environment rankings
More orthodox, market-oriented policies will help Brazil to recover from crisis

Business environment outlook: Brazil's business environment at a glance
Policy towards private enterprise and competition
Policy toward foreign investment
Foreign trade and exchange controls
The labour market
Technological readiness

Business environment outlook: Macroeconomic environment

Business environment outlook: Policy towards private enterprise and competition
Government will be less interventionist than in the past

Business environment outlook: Policy towards foreign investment

Business environment outlook: Foreign trade and exchange controls
More open trade policies may lead to a deal with the EU

Business environment outlook: Taxes
Fiscal adjustments prioritise spending cuts, but tax rises may follow

Business environment outlook: Financing

Business environment outlook: The labour market

Business environment outlook: Infrastructure

Business environment outlook: Technological readiness

Economic forecast: Policy trends

Economic forecast: Fiscal policy

Economic forecast: Monetary policy

Economic forecast: International assumptions

Economic forecast: Economic growth

Economic forecast: Sectoral trends
Competitiveness shortcomings persist, but a weaker Real will help
Government reforms nationalist oil exploration policies
New stage in concessions programme boosts opportunities in infrastructure

Economic forecast: Inflation

Economic forecast: Exchange rates

Economic forecast: External sector

Economic forecast: Foreign direct investment in Brazil
Stocks and flows
Origin and distribution

Demographic assumptions
Favourable demographic dynamics in the past are beginning to deteriorate
An ethnically diverse population is open to foreign culture

Market opportunities: Market outlook
Economic diversity and trade growth will attract investors

Market opportunities: Consumer expenditure

Market opportunities: Social indicators and living standards

Long-term outlook: The long-term outlook

Long-term outlook: Long-term trends
Climate change and sustainability
Renewed efforts to forge trade links face headwinds

Long-term outlook: Methodology for long-term forecasts
Growth projections
Definitions of variables
The independent variables include:
Summary of findings
Productivity growth

Data summary: Global outlook

Data summary: Gross domestic product, current market prices

Data summary: Gross domestic product, at constant prices

Data summary: Gross domestic product by sector of origin

Data summary: Growth and productivity

Data summary: Economic structure, income and market size

Data summary: Fiscal indicators

Data summary: Monetary indicators

Data summary: Employment, wages and prices

Data summary: Current account and terms of trade

Data summary: Foreign direct investment

Data summary: External debt

Data sources and definitions
Global data
Domestic data

Guide to the business rankings model
Outline of the model
Calculating the rankings
Measurement and grading issues

Indicator scores in the business rankings model
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