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Economic and political overview

Economic Overview

Brazil is the largest economy in Latin America and ranks among the world’s top ten by nominal GDP. With a diverse industrial base and abundant natural resources, it also stands in the top seven by purchasing power parity. Over the last few years, Brazil’s economy has shown remarkable resilience and performed better than expected in 2024, growing an estimated 3% with a positive contribution from domestic demand from the private sector. However, growth is expected to slow to 2.2% in 2025 and 2026 (IMF). Household consumption, accounting for around two-thirds of GDP, should remain the main growth driver, supported by a tight labour market and minimum wage adjustments boosting real incomes. However, its expansion will ease due to the lagged impact of tight lending conditions.

Public accounts remain a weak point for Brazil, with mandatory spending making up 92% of total expenditures (Coface). In November 2024, the government proposed a budget plan with spending cuts of 0.6% of GDP for 2025–2026 to meet primary balance targets. However, markets found the cuts inadequate, weakening the Brazilian Real. A diluted version of the plan passed Congress in December 2024. The IMF estimated the budget deficit to be 8.2% in 2024 (from 7.4% one year earlier), with a primary deficit of USD 3.3 billion, narrower than the maximum shortfall permitted under its fiscal rules. For 2025, the deficit is expected to hover around 8%. The high gross public debt has been following an upward trend in recent years, reaching 87.6% of GDP in 2024. The trend is anticipated to continue over the forecast horizon, with the debt-to-GDP ratio reaching 94.7% by 2026 (IMF). In 2024, inflation reached 4.83%, according to government data. In response to rising inflation expectations, fiscal uncertainties, and a 27% depreciation of the Brazilian Real against the USD, the central bank resumed monetary tightening, ending the year with a 12.25% policy rate, with a forecast for a further increase. For 2025 and 2026, the IMF forecasts the inflation rate to ease to 3.6% and 3.1%, respectively.

According to IBGE, the annual unemployment rate was 6.6% in 2024, the lowest index in the time series started in 2012. The rate stood at 5.1% for men and 7.6% for women. By education level, those with incomplete secondary education had the highest unemployment rate (10.3%). Among individuals with incomplete higher education, the rate was 6.6%, double that of those with a completed higher degree (3.3%). Overall, the country continues to face social issues and has one of the highest levels of inequality in the world, with high disparities between the country's regions. Even though Brazil has lifted millions of people out of poverty in the last 15 years, 10% of the population still lives in poverty, while the country's richest 5% have the same income as the remaining 95% of the population. Data from the IBGE shows that 8.7 million people were lifted out of poverty in 2023, and the poverty rate dropped from 31.6% to 27.4% of the total Brazilian population.

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 2,173.672,188.422,307.162,444.942,571.54
GDP (Constant Prices, Annual % Change) 2.93.02.22.22.4
GDP per Capita (USD) 10,26810,29610,81611,42311,977
General Government Balance (in % of GDP) -7.4-8.2-8.0-7.3-6.2
General Government Gross Debt (in % of GDP) 84.787.692.094.796.4
Inflation Rate (%) 4.64.33.63.13.0
Unemployment Rate (% of the Labour Force) 8.07.27.27.37.4
Current Account (billions USD) -21.75-38.25-40.90-44.40-43.85
Current Account (in % of GDP) -1.0-1.7-1.8-1.8-1.7

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Brazil has abundant natural resources and a relatively diversified economy. The country is the world's largest producer of coffee, sugar cane and oranges, and is one of the world’s largest producers of soya. With forests covering half of the country and the world’s largest rainforest, Brazil is the world’s fourth-largest exporter of timber. Additionally, Brazil is home to the world’s largest commercial livestock herd. The country also attracts many multi-national groups in the food and bio-fuels industries. Still, even though agriculture represents around 40% of exports, it contributes relatively little to the GDP (6.2%) and only employs 8% of the population. According to the national statistics agency IBGE, Brazil's 2024 harvest produced 292.7 million tons of cereals, legumes, and oilseeds, a 7.2% decrease from 2023. Moreover, from January to November 2024, Brazilian agribusiness exports totalled USD 152.63 billion, representing 48.9% of the country’s total exports. A 5.2% decline in international price indices was partly offset by a 5.2% rise in export volumes.

Brazil is also a large industrial power and has benefited greatly from its mineral ore wealth. The country is the world’s second-largest exporter of iron and a major producer of aluminium. As an oil producer, Brazil is aiming to become more energy independent in the near future, with reserves that could make it one of the top oil producers in the world. Furthermore, the country is increasingly asserting itself in the textile, aeronautics, pharmaceutical, automobile, steel, and chemical industry sectors. Many of the world’s large automobile manufacturers have set up production plants in Brazil. Overall, the industry sector contributes 22.3% to the GDP and employs one-fifth of the population. According to IBGE,  industrial production increased by 3.3% in 2023.

The service sector represents 58.9% of Brazilian GDP and employs 72% of the active workforce. In recent years, the country has embarked on the production of high added-value services, especially in the fields of aeronautics and telecommunications. Tourism has also been on the rise, making it an important segment of the sector (tourism revenue reached a record of USD 7.341 billion in 2024, bolstered by foreign tourist spending). Even though the services sector was hit the hardest during the pandemic, it showed a significant recovery, with growth reaching pre-pandemic levels. The sector's recovery was mainly driven by services to families, information and communication, and transport, as well as a gentle bounce of the tourism industry. According to data from IBGE, retail trade sales ended 2024 with a 4.7% year-on-year increase, the largest rise since 2012.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 8.2 20.2 71.6
Value Added (in % of GDP) 6.2 22.3 58.9
Value Added (Annual % Change) 15.1 1.6 2.4

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Brazilian Real (BRL) - Average Annual Exchange Rate For 1 USD 3.493.193.653.905.16

Source: World Bank - Latest available data.

 

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Foreign Trade

Although foreign trade only represents around 34% of its GDP (World Bank, latest data available), Brazil has enormous economic potential. The country mainly exports soya beans (15.7%), petroleum oils (12.5%), iron ores (9%), cane or beet sugar (4.6%), and maze and corn (4%); while its main imports are petroleum oils (11%), parts and accessories for tractors and motor vehicles (3%), turbojets (2.6%), and motor cars (2.4% - data Comtrade).

In 2023, Brazil’s main export partners were China (30.7%), the United States (11%), Argentina (4.9%), the Netherlands (3.6%), and Mexico (2.5%); whereas imports came chiefly from China (22.2%), the United States (15.9%), Germany (5.4%), Argentina (4.9%), and India (2.8% - data Comtrade). Despite being the largest economy in Latin America and the ninth in the world, Brazil is still relatively closed compared to other large economies, with a low trade penetration and a low number of exporters relative to the population (its absolute number of exporters is roughly the same as that of Norway, a country with approximately 5 million people, compared to Brazil’s 200+ million). However, the country has been implementing changes to improve trade, such as reducing the time for documentary compliance for both exporting and importing by enhancing its electronic data interchange system. Additionally, given that the EU is Brazil's second-biggest trading partner, they are working on a free trade agreement - as a part of the EU's Association Agreement negotiations with the Mercosur countries. Not only that, but the bloc has also been looking into signing a bilateral agreement with China in a plan to modernise and open it to other regions.

Brazil’s trade balance is structurally positive but had been declining in recent years due to a drop in the prices of raw materials, an increase in energy imports and a decline in the competitiveness of Brazilian products. However, the positive balance increased in 2023, reaching 2.4% of GDP (from 0.4% one year earlier – data World Bank). According to the latest available data from WTO, in 2023, Brazil imported USD 252.7 billion and exported USD 339.7 billion in goods (-13.5% and +1.6% y-o-y), while in services the country imported USD 82.8 billion and exported USD 45.2 billion, respectively (+3.6% and +12.1% y-o-y).  According to preliminary government figures, Brazil's trade surplus fell by nearly 25% in 2024, reaching USD 74.6 billion, due to higher imports. Despite the 24.6% decline from 2023, it remains the second-largest surplus since records began in 1989.

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 193,162166,336234,690292,245252,710
Exports of Goods (million USD) 221,127209,180280,815334,136339,696
Imports of Services (million USD) 71,51452,17158,43979,90982,792
Exports of Services (million USD) 33,03327,51431,48240,29145,195

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 28.932.337.738.833.9
Trade Balance (million USD) 29,56735,66442,31251,52292,275
Trade Balance (Including Service) (million USD) -8,91411,00715,35511,90452,176
Imports of Goods and Services (Annual % Change) 1.3-9.513.81.0-1.2
Exports of Goods and Services (Annual % Change) -2.6-2.34.45.71.0
Imports of Goods and Services (in % of GDP) 14.815.818.519.215.7
Exports of Goods and Services (in % of GDP) 14.116.519.119.618.1

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) 2.94.93.43.43.4
Volume of imports of goods and services (Annual % change) 3.31.51.81.51.4

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Brazil is a member of the following international economic organisations: IMF, Mercosur, ICC, G-15, G-20, G-24, G-77, Latin American Integration Association (LAIA), WTO, among others. For the full list of economic and other international organisations in which participates Brazil click here. International organisation membership of Brazil is also outlined here.
Free Trade Agreements
The complete and up-to-date list of Free Trade Agreements signed by Brazil can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)		 2023
China 30.7%
United States 11.0%
Argentina 4.9%
Netherlands 3.6%
Mexico 2.5%
See More Countries 47.2%
Main Suppliers
(% of Imports)		 2023
China 22.2%
United States 15.9%
Germany 5.4%
Argentina 4.9%
India 2.8%
See More Countries 48.8%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Luiz Inácio LULA da Silva (since 1 January 2023) - the president is both Chief of State and Head of Government
Next Election Dates
Presidential: October 2026
Federal Senate (for two-thirds of Senate seats) and Chamber of Deputies: October 2026
Current Political Context
After approving a landmark tax reform in 2023 to merge five taxes into a single consumption levy with federal and regional rates, Lula’s government focused in 2024 on implementing the reform. Key steps included setting tax rates and forming a committee to manage state and municipal tax shares. However, income tax reform, aimed at reducing inequality, was postponed to 2025 due to the shortened parliamentary year caused by the October 2024 municipal elections. A budget adjustment package announced in November 2024 included this reform.
To pass reforms, the government must secure centrist support, often requiring policy compromises. In late 2024, the Supreme Court invalidated some parliamentary amendments for lack of transparency, complicating progress on the economic agenda. Despite a weak Workers’ Party (PT) performance in the municipal elections, Lula remains popular thanks to his solid base.
The next general elections are set for October 2026. Bolsonaro, barred from running until 2030 for undermining Brazil’s voting system, has pledged to regain power.
On the external front, Brazil maintained pragmatic ties with Argentina despite ideological differences with Javier Milei’s government. Relations with Venezuela soured after Brazil rejected its July 2024 presidential election results and opposed its BRICS membership during the October summit. Lula backed the creation of a BRICS alternative currency for trade. Additionally, after 25 years of negotiations, Mercosur and the EU announced a free trade agreement in December 2024, reducing export tariffs between the two blocs.
Main Political Parties
About two dozen political parties are represented in the Brazilian National Congress. Parties typically group to form coalition governments. However, politicians often change parties, which has led to weak party discipline.

The main parties by number of seats in Congress are:

- Social Liberal Party (PSL): far-right, conservative, nationalist, militarist, liberal, anti-communism, anti-feminism, anti-LGBTQI+, populist.
- The Worker's Party (PT): centre-left, social democratic. Party with the highest number of elected representatives throughout the country since 2003.
- The Liberal Party (PL): formerly known as the Party of the Republic (PR). Centre-right to right, liberal, conservative, Christian democracy.
- The Progressive Party (PP): right-wing, nationalist, conservative.
- Social Democratic Party (PSD): big-tent party, centrist, liberal, Christian democracy.
- The Democratic Movement Party (MDB): big-tent party, centrist, liberal, conservative.
- The Brazilian Social Democracy Party (PSDB): centre, social-democratic, liberal, conservative.
- The Brazilian Socialist Party (PSB): centre-left to left-wing, social-democratic, economic nationalism, state interventionism.
- Republicans: right-wing, conservative, Christian democracy.
- Democratic Labour Party (PDT): centre-left, social-democratic, labourism.
- Solidarity (SDD): left-wing, social-democratic, labourism.
- Podemos (PODE): centre-right to right, nationalist, populist.
- Socialism and Liberty Party (PSOL): left-wing to far-left, social-democratic, anti-capitalist, environmentalist.
- Forward (Avante): centre, Third Way, populism.
- New Party (NOVO): centre-right to right-wing, liberalism.
- Communist Party of Brazil (PCdoB): left-wing, Communism, Marxism–Leninism.
- Citizenship (PSDB-Cidadania): centre to centre-left, social liberalism, Third Way.
- Patriot (Patriota): right-wing to far-right, social conservatism, economic liberalism, militarism. In 2023, it merged with the Brazilian Labour Party to form the The Democratic Renewal Party (PRD)
- Green Party (PV): centre to centre-left, social-democratic, environmentalist, green politics.
- Sustainability Network (REDE): centre to centre-left, green politics, progressivism, environmentalism.
- The Brazil Union (União Brasil): liberal-conservative, formed through the merger of the Democrats (DEM) and the Social Liberal Party (PSL).

In the latest election, the Brazil of Hope Federation (FE Brasil), an electoral and parliamentary group formed by the Workers' Party (PT), Communist Party of Brazil (PCdoB) and Green Party (PV), obtained the majority of the seats.

Executive Power
The President is both Head of State and Government. He or she holds executive power and appoints the Council of Ministers. The President and Vice-president are elected by universal suffrage for a four year term, with the possibility of re-election for a second successive term.
Legislative Power
The legislative power is bicameral. The National Congress is made up of two houses: the Senate (upper house) and the Chamber of Deputies (lower house). The Senate is comprised of 81 members (three members for each of the 26 states and the Federal District of Brasília), each elected on a majority basis for eight-year terms, with one-third and two-thirds of the membership elected alternatively every four years. The Chamber of Deputies is comprised of 513 members, with seats allocated according to proportional representation, elected every four years for a four-year term. There are also legislatures and administrations at the state level in each of Brazil’s 26 states and in the Federal District.
 

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