Brazil economic conditions

Hi angeleyes2010,

A new thread has been created as from your post on the Brazil forum for better visibility.

Best of luck,
Christine

Hi Angeleyes2010,

Sort of a really vague question. Could you narrow down exactly what aspect of the economic conditions you are looking for information about?

If you just want an overview of the global situation the Brazilian economy is very stable. It continues to grow every year. While the annual growth is not spectacular by any means it is consistant. Brazil was the first country to recover from the worldwide disaster started by the US sub-prime crisis and it came out of the crisis in a stronger position than any other nation so far. Brazil has surpassed Great Britian to become the world's sixth largest economy. Exports are strong and investment continues to flow steadily into the country. It's a great country to live, work and invest in.

Cheers,
William James Woodward - Brazil Animator, Expat-blog Team

Hello, Angel Eyes.

I have a few remarks from my practical economic point of view of Brazil as a Brazilian citizen:

Inflation here teases again and the official indexes do not seem to be the real one we see at the supermarkets; Salaries do not seem to catch up with inflation; Official interest rates are going down but those practised by banks are still very high and hardly will go down; Social and economic differences also are still astonishing despite continuous officially reported "efforts" on making social inclusion and income distribution; The last government has created a virtual "C" class by providing an overwhelming credit offer to the masses; Our market is plenty of Chinese products; Violence has never been worse (in my opinion due to a very long period of social/economic abyss); NO INVESTMENT on education makes the major part of our population rude, ignorant, savage and prone to manipulation by the government; It seems the eyes of the governments have been more on macroeconomic aspects then on a permanent solution to internal market interests; From a regular worker's perspective, may one be a student, junior, senior, manager or a scientist, the north of Europe still seems very much more attractive and reports from European friends show that people there are really comfortable and do not see much changes on their daily lives as from the drawbacks in the south (Greece, Spain, Portugal and Italy).

In resume, practical aspects of the daily life of a consumer or a worker still have not changed in Brazil or the northern Europe, despite the new and astonishing credit offer in South America and the recent events in the Iberian / Mediterranean part of Europe.

Hello Angel !

Even though William is very thorough and right in his explanation (as always), Pedro gives you the right feeling of the people living in the country.

I have been living for 2 years in Sao Paulo and the inflation together with the devaluation of the reais since my arrival, I earn actually less than 2 years ago... with a promotion in between!

The economic boom only provides the opportunity to present a beautiful surface but it isn't enough to change mindsets, a system based on networks of the wealthiest, a systematic political and administrative corruption that endanger little companies (that are way more efficient to raise the "C" class up than massive credits), and a total aversion to question anything. Result? The administrative system is stupid and tiring, there is a total lack of competition, there is no "middle" health and education: whether very bad but free or good and very expensive.

The country is full of Chinese product? Well, it is not because the governement is not protective; yet to promote development, you need market protection protection combined with education and support of entrepreneurship (which is inexistant).

Brazil is a market for big fishes, ready to corrupt and able to build connections quickly. Daily life is easier in many part of the world. Living here is for sure a brilliant experience though and moving in now might still be easier than 10 years ago - just avoid SP, life is more expensive than in European capitals.

Guipel

Hi Guipel,

Your comments are right on the mark except for the one about needing market protection. Actually, if anything there is far too much market protection here and an extremely high tax rate. Imported goods have at least a 60% tax load right off the top, plus all the various other taxes that products are subject to here in Brazil. This is the reason that there are so many cheap and poor quality Asian products here. They enter Paraguay and Uraguay freely and are smuggled into Brazil along with cigarettes and other highly taxed products to be sold on the grey-market here. The government is constantly trying to crack down on this illegal trade, but they don't seem to get the message that they can only control it by reducing taxes to a reasonable level where they could then have a larger product captations. If you make a little bit of tax revenue on ALL products that come into the country, you don't have to tax the Hell out of the few products that come in legally. In the end it would work out much better, but that takes a bit of thought, something Brazilian politicians are not famous for. It is now getting to the point where even foodstuffs will soon be smuggled because the tax load on foods (on average) is 22 percent, with some products subject to more than 60 percent tax. The Brazilian population are taxed right out of their skins and can't carry the burden anymore. This makes fertile ground for the seeds of smuggling. It also sets up a situation where foreign investment gets hurt since people won't invest in producing products here in Brazil that are commonly smuggled into the country. This is a cold hard fact that the Brazilian government tends to ignore completely.

Cheers,
William James Woodward - Brazil Animator, Expat-blog Team

I totally agree with you! I think I was misleading in my comment.
According to me, the government is protective because the protection is not aimed at the market but its main players.

Indeed, if you want a market to develop you need to combine protection with education & support for new business. The feeling I have is that, they almost don't do anything in education/support. What remains? Protection of the few who "lobby" in Brasilia.

What you explain is not only good for consumers: the number of people around me willing to start a business is astonishing. Yet, 98% of those who do step on the adventure cheat regularly. They explain they wouldn't make it if they had to follow all the stupid and expensive rules.

I think that this is where the danger lies... this was one of the main issue in Greece: people don't pay tax because they know it is unfair. In the end the state gets weak.

Boa noite,
Guipel

Hi Guipel,

It's no wonder those in business are so tempted to cheat, Brazil has the most complex tax structures for businesses in the civilized world. They appear to have absolutely no intention whatsoever of simplifying things either.

I wish I could remember the name of the company because I read a very shocking comparison. A Canadian company which operates here in Brazil has a department with 300 full-time employees to handle taxation matters while at the same time this is easily handled by THREE part-time employees for their Canadian operations. The costs are staggering and it's bound to stifle investment, especially when you consider the fact that on average it takes about 125 days to register and start up a business in Brazil as opposed to 30 days in most other countries.

See the following link for a report on taxation in Brazil written by KPMG.

http://www.kpmg.com/global/en/issuesand … exity.aspx

Cheers,
William James Woodward - Brazil Animator, Expat-blog