Business in Brazil - an introduction

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June 1, 2011

Recent Significant Developments

Standard & Poor's nudged Brazil closer on May 23 to a higher credit rating, a move that reflects a resilient economy at a time some countries in Europe are suffering downgrades. Brazil was raised to investment grade in 2008 by all three credit rating agencies.
Brazil's GDP rose by 4.2% year-on-year in the first quarter of 2011. The figure marks a slowdown from the 6.3% growth rate Brazil posted in the accumulated 12 months ending on the third month this year.

Brazil replaced Italy as the world’s seventh-largest economy last year. The domestic consumption, supported by high demand for commodities, continue to set the stage for high economic growth.
Brazil is by far the biggest Internet retail market in Latin America, accounting for 70 percent of all regional sales. The country also enjoys the highest per capita spend online in the region – at $42.

Contents       Brazil’s Significance Key Economic Indicators Foreign Trade Internet Usage Doing Business in Brazil Political & Business Environment .

Contents       Brazil’s Significance Key Economic Indicators Foreign Trade Internet Usage Doing Business in Brazil Political & Business Environment .

459 1.057 29 59 26 27 13 13 14 15 Australia Mexico Korea 1.920 11.742 39. 2.6% 1.6% 1.086 4.Brazil is an economic powerhouse and is quickly surpassing some European countries Rank 1 2 3 4 Country U.316 2011 GDP Growth Est.284 Rank per capita PPP 7 2 3 4 5 6 7 8 9 China Japan India Germany Russia U.1% 2.459 3.658 Per Capita PPP US$ 47.172 2.394 120 Source: IMF (International Monetary Fund) .4% 2.392 14.0% 4.239 34.583 2.567 1.410 1.K.8% 0. Brazil 2.805 3.236 1.8% 9.S.247 2.8% 8.033 15.A. China Japan Germany GDP 2010 US$ bn 14.173 2.339 36.774 1.519 33.878 5.007 3.030 4.K.7% 4.5% 15 Indonesia 1.A.5% Rank 1 Country U.430 29.145 7.2% 4.369 1.940 2.658 5.330 29.090 1.8% 10 11 12 13 14 Italy Mexico Korea Spain Canada 1.837 34.039 1.077 94 25 126 20 52 22 71 24 5 6 7 France U.6% 4. GDP 2010 PPP US$ bn 14.055 1. Brazil France 10.060 2.S.538 1.574 1.5% 8 9 10 11 12 Italy Canada India Russia Spain 2.223 2.465 1.836 29.310 4.

5 2.216 310 234 5 6 7 Brazil Australia India 8.A.8 2.6 Rank 1 2 3 4 Country China India U. Indonesia Population (million) 1.4 2.3 5 6 7 Brazil Pakistan Bangladesh 193 167 164 8 9 10 11 12 Argentina Kazakhstan Sudan Algeria Congo 2.1 2.1 10.0 9.3 8 9 10 11 12 Nigeria Russia Japan Mexico Philippines 156 140 127 109 94 13 14 15 Greenland Saudi Arabia Mexico 2.7 2.S.S.0 13 14 15 Vietnam Ethiopia Germany 88 85 82 Sources: IMF (2010 pop.341 1.A. China Area km² (million) 17.8 9.) and CIA .7 3.2 2.5 7.Brazil’s size provides it with natural resources and a large consumption base Rank 1 2 3 4 Country Russia Canada U.

5 trillion .Brazil is on par with China and USA on Brazil’s Significance three power-driving attributes Countries with area > 7 million km² Russia Mexico Countries with population > 100 million Bangladesh Australia Brazil USA China Canada Japan France Germany United Kingdom Italy Spain India Pakistan Indonesia Nigeria Countries with GDP > US$ 1.

Contents       Brazil’s Significance Key Economic Indicators Foreign Trade Internet Usage Doing Business in Brazil Political & Business Environment .

000 5.000 6.0% 4.0% 3.000 1.000 6.2% 7.0% 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -2.0% 1.000 3. PPP) GDP Growth % (right scale) 8.0% 5.0% 0. current prices) GDP (US$ bn) GDP (US$ bn.0% -1.0% actual forecast Source: IMF .000 2.0% 2.0% 7.Brazil’s GDP is resilient and sustainable with a long term expected growth of 4.000 4.0% GDP (R$ bn.

0% 6.0% actual forecast actual forecast -3.0% 1. Banco Central do Brasil.0% Current Account Balance .0% -2. .00 6 4 actual forecast 1.0% 0.50 actual 2006 2007 2008 2009 2010 2011 forecast 2012 2013 2014 2015 Sources: IMF.0% -4.0% 5. despite a strong and consistent monetary policy Consumer Price Inflation % 7.0% 1.% of GDP 2.0% 2.0% 3.0% 4.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Key Interest Rate % 20 18 16 14 12 10 8 Exchange Rate R$ per US$ 2.Inflation is under pressure.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -1.50 2.0% 0.

Banco Central do Brasil.Sound economic policies are attracting FDI and shielding the country from int’l crisis Foreign Direct Investment 50 45 40 35 30 25 20 15 10 5 0 350 300 250 International Reserves US$ billions US$ billions Total Services 200 150 100 50 Manufacturing Agriculture 2007 2008 2009 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Origin of FDI 2009 Netherlands USA Spain Germany France Source: CIA. % of total 19 16 11 8 7 Contribution to GDP .2010 Agriculture 6% Industry 26% Services 68% .

Contents       Brazil’s Significance Key Economic Indicators Foreign Trade Internet Usage Doing Business in Brazil Political & Business Environment .

Indústria e Comércio Exterior .Brazil has been achieving trade surpluses despite a strong valuation of the Real (R$) Balance of Trade 250 200 FOB (US$ bn) 150 Exports of goods 100 50 0 2006 2007 2008 2009 2010 Imports of goods Source: Ministério do Desenvolvimento.

2 5.2 22.1 7.3 14.4 14.6 39.0 14.6 17.1 % of total USA China Argentina Germany Major Imports 2010 15.0 2.The economy is diversified.0 Source: Secretaria de Comércio Exterior.1 Intermediate products & raw materials Capital goods Consumer goods Fuels & lubricants 46.9 % of total Primary products Manufactured products Semi-manufactured products Special Operations 44.6 9. MDIC .9 6.3 9. with manufacturing playing a key role in exports Leading Markets 2010 % of total Leading Suppliers 2010 % of total China USA Argentina Netherlands Major Exports 2010 15.

612 Transport Computer and information. $1. $1.899 Insurance. $15. representing 9. $2.e. $166 Construction. cultural and recreational services. having bought US$3 bn in information services in 2009 Imports of Other Services .2009 50 45 40 35 Communications. $2.795 US$ billions 30 25 20 15 10 5 Other business services.Brazil is a net importer of services. $958 Government services n.i.2009 Trade in Services .512 Exports Imports In 2009 Brazil imported a total of US$12 billion in Information & Communication Technology goods..815 Financial services. $2.4% of total imports Source: UNCTAD .348 Royalties and licence fees. $4 Other services Travel Personal.

market research and public opinion polling $- Exports Imports In 2009 Brazil exported a total of US$5. engineering and other technical services Research and development $3 $2 $1 Advertising. and recreational services Architectural.Brazil is a net exporter of Creative Services.2009 $7 $6 Audiovisual and related services $5 US$ billions $4 Personal. cultural. with strengths in R&D and technical services Trade in Creative Services . engineering and other technical services. representing 3% of total exports Source: UNCTAD .6 billion in architectural.

Contents       Brazil’s Significance Key Economic Indicators Foreign Trade Internet Usage Doing Business in Brazil Political & Business Environment .

to 27% % of homes with: TV Radio Cellular Phone Fixed Line Phone Desktop Satellite Dish 20% 17% 14% 24% 20% 28% Computer & Internet Penetration 36% 27% Cellular w/ Internet Game Console Paid TV Laptop 0% 20% 40% 60% 80% 100% 2006 2007 2008 2009 Households with Computer Households with Internet Source: CETIC.br .Internet access at the household doubled in the 3 years to 2009.

br .Access from “Lan Houses” is a popular form of internet access in Brazil Place of Internet Access Home Work % of All Internet Users 48% 22% Activities Performed on the Internet Communication & social % of All Internet Users 90% Leisure Online searches for information and services 86% 89% School Other person’s home Free public access Paid public access Cellular phone Other 14% 26% 4% 45% 3% 1% Training & education Financial services 72% 14% Source: CETIC.

7 81.2 % Penetration 77. with 4% of the world total Country USA Internet Users (millions) 239.6% Source: Internet World Stats .0 59.3% Brazil Russia India China 72.9% 31.0 36.Brazil has the 5th largest number of internet users.0 420.8% 6.2% 42.

500 facebook.com uol.com Thousands Number of .com 2.The number of .com blogspot.br domains has doubled in the past 3 years in Brazil Brazil Rank 1 World Rank 30 Site Google Brasil Address google.com terra.br Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Sources: Alexa.com ig.000 2.500 1.com.com.br twitter.000 500 - 10 11 12 13 14 15 4 93 201 9 11 315 Yahoo! Orkut Terra Twitter MSN iG yahoo.br live.com.000 1.com globo.br .br orkut.br domains 3.com msn.br 2 3 4 5 6 7 8 9 1 2 3 82 89 8 105 5 Google Facebook YouTube Universo Online Orkut Brasil Windows Live Globo Blogger.com orkut.com youtube.com.com. CETIC.com google.

with growth of more than 11% Top Growing Countries in May 2011 on Facebook Source: Socialbakers .Top growing country for Facebook in May was Brazil.

Contents       Brazil’s Significance Key Economic Indicators Foreign Trade Internet Usage Doing Business in Brazil Political & Business Environment .

Doing Business in Brazil    Portuguese is the language spoken in Brazil (not Spanish!) Relationships and face-to-face contacts are very important Taxation laws and fiscal issues are complex and change frequently Labor laws and social costs are burdensome and favor the employee The business culture is sophisticated and westernized Laws and contracts are respected and enforced    Source: Enosis Global .

The South-East region has most of Brazil’s Brazil’sdriven Significance wealth creation. by São Paulo state A 8% 28% 5% 13% 45% B A: North E C D São Paulo 56% 42% 18% B: North-East C: South-East D: South E: Center-West 11% 14% 7% Population 17% 9% GDP 7% 19% Area Source: IBGE -2010 .

Contents       Brazil’s Significance Key Economic Indicators Foreign Trade Internet Usage Doing Business in Brazil Political & Business Environment .

plus the federal district of Brasilia.    Source: EIU . The executive: The president. which s/he heads . who is elected for a term of four years. Head of state: Elected president. Form of state: Federative republic. 513-member directly elected Chamber of Deputies (the lower house).Brazil’s government structure is very similar to the Unites States’    Official name: Federative Republic of Brazil. National legislature: Bicameral national Congress: 81-seat Senate (the upper house) with representatives of 26 states. chooses a cabinet. The 26 states and the district of Brasilia each has a legislature. the country has a system of courts for dealing with disputes between states and matters outside the jurisdiction of state courts. who controls the budget. Legal system: Each state has its own judicial system.

congressional and state elections every four years. presidential. businesses suffer from a burdensome tax system  National government: Dilma Rousseff is Brazil’s first female President. Source: EIU . National elections: Municipal elections every four years. will keep the country’s position broadly stable in the global and regional rankings. the pension system will weigh on public-sector finances and vested interests will continue to distort productivity gains. having succeeded in January 2011 the very popular Luiz Inácio Lula da Silva. But the tax system will remain complex and burdensome.   Business Environment: Modest improvements. with the next due in October 2012. A consolidated democracy has led to peaceful transitions and continuity of sound macroeconomic policies. with the next due on October 2014. mainly driven by the consolidation of macroeconomic stability and better domestic financing conditions.Despite a strong democracy.

Contact information James P.com . Locke CEO Enosis Global LLC +1-302-766-7926 jlocke@enosisglobal.

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