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Brazil-Trade Patterns and Regional Economic Integration

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Brazil Index

Underlying much of the debate over trade policy in Brazil in the 1990s is an implicit choice between regional trade arrangements or a more nonpreferential policy that would not discriminate by national origin or destination. Brazil's most important current regional trade initiative is the Common Market of the South (Mercado Comum do Sul--Mercosul; see Glossary). With the ratification of the North American Free Trade Agreement (NAFTA; see Glossary) among Canada, Mexico, and the United States in 1993, it was inevitable that Brazilian participation in even larger regional trade arrangements than Mercosul would be discussed increasingly.

Despite the rhetorical prominence of Latin American trade in debate over Brazilian trade policies, Brazilian trade flows do not reflect a particularly strong orientation to other Latin American countries. However, with Mercosul, other Latin American countries may gain in relative importance. By the mid-1990s, trade with the other Mercosul partners, particularly Argentina, was one of the most rapidly growing sectors of Brazilian foreign trade.

In the 1980s, Brazilian exports to the rest of South America had averaged less than 10 percent of all exports; exports to Mexico, Central America, and the Caribbean added another 2 percent. Brazilian exports were directed overwhelmingly to the United States and Canada (about 30 percent) and to Western Europe (about 30 percent).

Brazilian export patterns in the 1980s and early 1990s were little different from earlier decades, when they were also dominated by trade with the United States and with Europe. This trade orientation reflected several historical influences, including the structure of Brazilian international transportation channels and the composition of Brazilian exports. Only in the 1970s did Brazilian exports shift from being dominated by primary and semiprocessed products to manufactures. Major markets for all these products were primarily in high-income countries; for example, Brazil long depended on the United States as its major market for coffee. Other important primary products, such as sugar, soybeans, and iron ore, were also sold mainly in high-income countries (see table 17, Appendix).

Finally, and possibly most important, Brazilian export patterns reflected the relatively strong inward orientation of most of Brazil's Latin American trade partners during most of the early post-World War II decades. The strong influence of the import-substitution industrialization doctrines of the Economic Commission for Latin America and the Caribbean (ECLAC; see Glossary) in most of the Latin American economies in the 1950s had by the early 1960s led to extensive import-substitution industrialization, particularly in Brazil and its larger trading partners, notably Argentina and Mexico. The inevitable result was that the more open economies of Europe and North America continued to provide the most important markets for Brazilian exports. Only with the concurrent liberalization of trade in a number of other Latin American economies, especially Argentina, did Brazil's exports begin to reflect the importance of its Latin American trade partners.

Brazil's export orientation toward North America and Europe is also noticeable in its import pattern. In addition, the Middle East is a significant trade partner because of the high value of petroleum imports. The large trade deficit with this region was financed primarily by surpluses with other regions, notably the United States and Europe. Brazil's imports from the rest of Latin America accounted for only about 12 percent of the total value of its imports in the 1980s.

Despite the approximately equal shares of Latin American trade in both Brazil's exports and its imports, during most of the 1980s Brazil had a large trade surplus with the region, exceeding US$800 million in most years. This surplus, which was generated primarily in trade with Argentina, Bolivia, and Paraguay, helped finance Brazil's oil imports from two of the region's oil exporters, Mexico and Venezuela. The value of Brazilian imports of petroleum from these countries was greatest in the early 1980s and declined with the fall in petroleum prices.

Brazilian attempts to expand formal regional trade agreements beyond bilateral preferential trading arrangements date from 1958, when the government joined Argentina, Chile, and Uruguay in discussions that led to the Treaty of Montevideo, signed in February 1960. Under the treaty, which was expanded subsequently to most of the economies of South America and to Mexico, the members agreed to negotiate mutual tariff reductions on a permanent basis.

Despite its professed intentions, the organization created by the treaty, the Latin American Free Trade Association (LAFTA--also known as Asociación Latinoamericana de Libre Comercio--ALALC; see Glossary) was only a limited success. Part of the reason lay in the departures of many of the agreements from the nondiscriminatory provisions of Article 24 of the General Agreement on Tariffs and Trade (GATT--see Glossary), which regulates regional trade agreements. Although the intent of LAFTA was to create new trade rather than to divert trade flows from efficient sources outside the region, its success in this respect was minimal. Another provision of the agreement, which required the formation of a free-trade area within a specified time period, was ignored. The deadline for LAFTA to create such an area was first extended from 1972 to 1980; when the 1980 deadline was not met, LAFTA was replaced by the Latin American Integration Association (LAIA--also known as Associação Latino-Americana de Integração--ALADI), which had more modest goals. The real blow to LAFTA/ALADI trade came after 1982, when international capital markets were closed to most Latin American borrowers following the onset of Mexico's external debt crisis. Like most Latin American governments, Brazil reacted by sharply restricting its imports, including those from other ALADI members. As a result, intraregional trade fell significantly in the first half of the 1980s.

Argentina historically has been Brazil's most important Latin American trade partner by a wide margin, both in imports from Brazil and exports to it. For this reason, virtually all Brazilian regional trade initiatives have been based on this bilateral trade relationship. Well behind, and of comparable importance, are Chile, Mexico, and Venezuela. One feature of Brazil's regional trade is the substantial surpluses that it has run with several of its neighbors, among them Bolivia, Colombia, and Paraguay. In the case of Paraguay, this surplus may reflect an underreporting of imports as a result of the high value of contraband and unreported consumer good imports from Paraguay to Brazil. Another prominent feature of Brazil's trade with the rest of Latin America is the importance of imports from the temperate-zone Southern Cone countries. With the exception of the oil exporters, Brazilian imports from other tropical Latin American economies are relatively unimportant, despite the importance of several of them as markets for Brazilian exports.

During the 1970s, Brazil's trade with the United States, historically its most important trade partner, declined in relative importance as trade with Western Europe and Japan grew. On the export side, this trend ended in the early 1980s, as the United States economy grew more rapidly than Europe's and the real appreciation of the dollar made the United States a relatively more attractive market in which to sell. The tendency toward a greater trade surplus was reinforced by Brazil's efforts after 1982 to restrict imports, especially from traditional suppliers like the United States.

Brazil's export-led growth (see Glossary) since the 1980s has been oriented decidedly toward the industrialized countries. As a result of their already large share of Brazil's export market and their rates of growth, the United States and Canada were responsible for nearly half of Brazil's export growth during the late 1980s and early 1990s. Brazil's most rapidly growing market in the period was the rest of South America, with annual growth exceeding 10 percent. However, its relatively modest initial share of the Brazilian export market placed South America behind Asia and the Pacific and Western Europe, as well as the United States and Canada, in its contribution to total Brazilian export growth.

Brazilian import growth in the 1980s and early 1990s presents a similar picture. The total value of Brazilian imports in this period grew very slowly, as the decline in the value of oil imports nearly offset the rise in the value of imports from Western Europe and North America. As was the case with exports, the industrialized countries were far more important trade partners for Brazil than were the less developed regions. Brazilian imports from other Latin American trade partners fell in value after 1983, as modest increases in imports from the rest of South America and the Caribbean were more than offset by the fall in imports from Mexico and Central America.

Until the early 1990s, both Brazil and Argentina had a tradition of inward-oriented industrial policy, and it is therefore not surprising that trade between the two economies fell far short of its probable potential. The 1986 trade agreement between Brazil and Argentina was a partial attempt to address this problem and formed the nucleus of the regional trade agreement for Mercosul.

President Sarney and Argentina's Raúl Alfonsín (president, 1985-89) signed twelve protocols in July 1986 and additional protocols in December 1986. Most of the protocols aimed at strengthening Argentine-Brazilian economic cooperation, although cooperation in other areas also was included. In November 1988, following extensive consultations between the two governments, Alfonsín and Sarney signed the final Argentine-Brazilian Agreement, which was ratified subsequently without modification by the congresses of the two countries in August 1989.

Both governments hailed the agreements as major steps toward economic integration, as well as a Latin American response to what was perceived as the formation of economic blocs, such as the plans of the United States-Canada Free Trade Agreement (FTA) and the European Community (EC; see Glossary). In reality, the protocols were more statements of intention than the detailed results of negotiations in the areas covered. The Argentine-Brazilian Agreement was a short, five-page general statement summarizing the objectives of the July 1986 protocols. Unlike the massive United States-Canada FTA, it in effect deferred much of the specific negotiation involved in the agreement's implementation to the future. It was nevertheless an ambitious document, appearing to promise a level of cooperation and coordination analogous to that of the EC.

The Argentine-Brazilian protocols signed between 1986 and 1988 paved the way for an even more ambitious regional trade agreement. Following negotiations with Uruguay and Paraguay, the foreign ministers of the respective governments agreed in March 1991 in Asunción, Paraguay, to establish a common market among the four countries by the end of 1994; the Treaty of Asunción, which established Mercosul, explicitly recognized the potential participation of additional members. Like the earlier bilateral Argentine-Brazilian agreements, the 1991 Mercosul agreements were long on promises and left much for future negotiations. The agreements envisioned a full common market. Article 1 of the treaty provides for free circulation of goods, services, and factors of production (see Glossary) among the member countries; elimination of tariff and nontariff barriers; establishment of a common external tariff; coordination of policies in regional and international forums; and coordination of macroeconomic and sectoral policies.

During the transition period from 1991 through 1994, the accord called for a progressive "linear and automatic" reduction in tariffs, which was to be accompanied by the elimination of nontariff barriers to trade among the contracting parties. The December 31, 1994, target was to be a zero tariff among the members. As more recent entrants, Paraguay and Uruguay were given an additional year to comply with the terms of the treaty.

Compared with some earlier declarations of intent, the Treaty of Asunción was considerably more specific about how the common market was to be created. A schedule for tariff reductions was established; cuts were to be made at six-month intervals between June 30, 1991, and December 31, 1994. These reductions were to be calculated as a percentage of the lowest tariffs applied to members outside the Mercosul group and were based on the ALADI tariff classification.

Several other provisions of the treaty give it a positive bias toward greater economic openness. Tariff reductions are based on the rates prevailing before the signing of the treaty. Any external tariff reductions that lower the base from which intra-Mercosul tariffs are calculated was to apply to all signatories. The treaty also contains a type of "most-favored-nation" clause, which guarantees that any trade concession extended to nonmembers of Mercosul by any member will be extended automatically by all other contracting members.

The Treaty of Asunción allowed each nation to submit a list of exceptions to the tariff reduction list. Brazil and Argentina submitted 324 and 394 tariff exceptions, respectively; Paraguay, allowed 439; and Uruguay, 960. Although it is impossible to quantify the degree to which these exemptions undercut the main thrust of the treaty, their most important feature was that they were temporary. Argentina and Brazil agreed to reduce their exception list by 20 percent annually, while Paraguay and Uruguay were allowed an extra year (to the end of 1995) to eliminate their lists.

Brazil and many of its neighbors have tended to view Brazilian trade preference options as geographically defined and relatively local. Whatever the outcome of the Mercosul regional initiative, the existing pattern of Brazilian trade flows suggests that Brazil's long-term trade interests extend well beyond such regional boundaries. Indeed, Mercosul and the European Union (EU, the former EC; see Glossary) have been discussing the creation of a free-trade area between the two groups. Two alternatives to Brazil's South American-focused regional trade policy are participation in a hemispheric FTA or more open, nonpreferential trade with the entire world. The former would follow the Mexican example by negotiating Brazil's entrance into the NAFTA, which is composed of the United States, Canada, Mexico, and potentially, Chile. The second strategy is to follow a Chilean approach, avoiding preferential trade liberalization and making Brazil more open to all trade flows, whatever their geographical source.

Compared with membership in an expanded NAFTA, Brazilian participation in Mercosul represents a much more modest regional trade arrangement. Canada alone has a larger GDP than do all of the Mercosul economies combined; the four Southern Cone members have a combined GDP totaling less than 10 percent of the total GDP of the NAFTA countries. Given recent rates of economic growth, this gap has actually widened in recent years.

The great disparity in the sizes of the two regional trade groups has a number of implications for alternative Brazilian trade strategies. Membership in the current group, in which Brazil is by far the dominant economy, offers political influence and the possibility of shaping many of Mercosul's external commercial policies to match Brazilian trade objectives. In many manufacturing areas, Brazil faces little competition from the other Mercosul countries. If Brazil were to become a member of the larger hemispheric trade group (NAFTA), the country would account for only about 5 percent of the association's joint product.

In addition to the size difference between Mercosul and a hemispheric FTA, other features of the two regional trade arrangements have important cost and benefit implications for Brazil. The Treaty of Asunción is in many ways more ambitious than is NAFTA. Its stated objective is the creation of a true common market similar to the EU. In such a regional trade arrangement, trade barriers among the member countries are eliminated and external tariffs against third countries, fiscal policies, and exchange-rate policies are integrated.

Brazilian participation in a hemispheric FTA would in principle require less coordination of fiscal, monetary, exchange-rate, and foreign capital policy than is required by the Treaty of Asunción. One may question how seriously the Brazilian government or other Mercosul members are prepared to implement the integration implied by a common market. The replacement of LAFTA by ALADI in 1980 suggests that in the choice between national sovereignty and the benefits of greater economic integration, the former may prevail. But, if the explicit commitments of the four governments in the Treaty of Asunción are to be taken at face value, it would appear that a relatively high degree of policy independence would be sacrificed for economic integration benefits, which are likely to be considerably more modest than those attainable by membership in a hemispheric FTA.

Another option for Brazil would be to follow a Chilean approach of greater trade openness on a nonpreferential basis. Such an approach has three main advantages, which in principle make it superior to other trade strategies. First, the possibility that inefficient trade diversion will occur is eliminated. The lowest cost or most efficient producers would be able to supply Brazil without facing trade barriers, because no such producer would be eliminated from among Brazil's potential suppliers under a nonpreferential open-trade policy. Brazilian demand would thus be supplied by the most efficient suppliers in the world market, rather than those in a more restricted area.

Second, a nonpreferential approach in Brazilian trade policy would be more easily administered because it is in effect a unilateral policy, not dependent on negotiations with potential trade partners. However, this approach may not be perceived as an advantage from a political standpoint, as it appears to sacrifice Brazil's "bargaining chips."

Third, a nonpreferential strategy may better position Brazil to respond to changes in world markets. Until the mid-1990s, Brazilian trade had not grown faster in the Mercosul region than in other areas. In fact, the United States, Canada, Western Europe, and Asia all contributed more to the growth of Brazilian trade until the mid-1990s than did other Latin American economies. Although Brazilian membership in a hemispheric FTA might ensure greater access to the United States, Canada, and Mexico, it would offer little prospect of trade expansion with Europe or Asia.

Data as of April 1997

BackgroundFollowing more than three centuries under Portuguese rule, Brazil peacefully gained its independence in 1822, maintaining a monarchical system of government until the abolition of slavery in 1888 and the subsequent proclamation of a republic by the military in 1889. Brazilian coffee exporters politically dominated the country until populist leader Getulio VARGAS rose to power in 1930. By far the largest and most populous country in South America, Brazil underwent more than half a century of populist and military government until 1985, when the military regime peacefully ceded power to civilian rulers. Brazil continues to pursue industrial and agricultural growth and development of its interior. Exploiting vast natural resources and a large labor pool, it is today South America's leading economic power and a regional leader. Highly unequal income distribution and crime remain pressing problems.
LocationEastern South America, bordering the Atlantic Ocean
Area(sq km)total: 8,514,877 sq km
land: 8,459,417 sq km
water: 55,460 sq km
note: includes Arquipelago de Fernando de Noronha, Atol das Rocas, Ilha da Trindade, Ilhas Martin Vaz, and Penedos de Sao Pedro e Sao Paulo
Geographic coordinates10 00 S, 55 00 W
Land boundaries(km)total: 16,885 km
border countries: Argentina 1,261 km, Bolivia 3,423 km, Colombia 1,644 km, French Guiana 730 km, Guyana 1,606 km, Paraguay 1,365 km, Peru 2,995 km, Suriname 593 km, Uruguay 1,068 km, Venezuela 2,200 km

Coastline(km)7,491 km

Climatemostly tropical, but temperate in south

Elevation extremes(m)lowest point: Atlantic Ocean 0 m
highest point: Pico da Neblina 3,014 m
Natural resourcesbauxite, gold, iron ore, manganese, nickel, phosphates, platinum, tin, uranium, petroleum, hydropower, timber
Land use(%)arable land: 6.93%
permanent crops: 0.89%
other: 92.18% (2005)

Irrigated land(sq km)29,200 sq km (2003)
Total renewable water resources(cu km)8,233 cu km (2000)
Freshwater withdrawal (domestic/industrial/agricultural)total: 59.3 cu km/yr (20%/18%/62%)
per capita: 318 cu m/yr (2000)
Natural hazardsrecurring droughts in northeast; floods and occasional frost in south
Environment - current issuesdeforestation in Amazon Basin destroys the habitat and endangers a multitude of plant and animal species indigenous to the area; there is a lucrative illegal wildlife trade; air and water pollution in Rio de Janeiro, Sao Paulo, and several other large cities; land degradation and water pollution caused by improper mining activities; wetland degradation; severe oil spills
Environment - international agreementsparty to: Antarctic-Environmental Protocol, Antarctic-Marine Living Resources, Antarctic Seals, Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands, Whaling
signed, but not ratified: none of the selected agreements
Geography - notelargest country in South America; shares common boundaries with every South American country except Chile and Ecuador
note: Brazil conducted a census in August 2000, which reported a population of 169,872,855; that figure was about 3.8% lower than projections by the US Census Bureau, and is close to the implied underenumeration of 4.6% for the 1991 census (July 2009 est.)
Age structure(%)0-14 years: 26.7% (male 27,092,880/female 26,062,244)
15-64 years: 66.8% (male 65,804,108/female 67,047,725)
65 years and over: 6.4% (male 5,374,230/female 7,358,082) (2009 est.)
Median age(years)total: 28.6 years
male: 27.8 years
female: 29.3 years (2009 est.)
Population growth rate(%)1.199% (2009 est.)
Birth rate(births/1,000 population)18.43 births/1,000 population (2009 est.)
Death rate(deaths/1,000 population)6.35 deaths/1,000 population (July 2009 est.)

Net migration rate(migrant(s)/1,000 population)-0.09 migrant(s)/1,000 population (2009 est.)
Urbanization(%)urban population: 86% of total population (2008)
rate of urbanization: 1.8% annual rate of change (2005-10 est.)
Sex ratio(male(s)/female)at birth: 1.05 male(s)/female
under 15 years: 1.04 male(s)/female
15-64 years: 0.98 male(s)/female
65 years and over: 0.73 male(s)/female
total population: 0.98 male(s)/female (2009 est.)
Infant mortality rate(deaths/1,000 live births)total: 22.58 deaths/1,000 live births
male: 26.16 deaths/1,000 live births
female: 18.83 deaths/1,000 live births (2009 est.)

Life expectancy at birth(years)total population: 71.99 years
male: 68.43 years
female: 75.73 years (2009 est.)

Total fertility rate(children born/woman)2.21 children born/woman (2009 est.)
Nationalitynoun: Brazilian(s)
adjective: Brazilian
Ethnic groups(%)white 53.7%, mulatto (mixed white and black) 38.5%, black 6.2%, other (includes Japanese, Arab, Amerindian) 0.9%, unspecified 0.7% (2000 census)

Religions(%)Roman Catholic (nominal) 73.6%, Protestant 15.4%, Spiritualist 1.3%, Bantu/voodoo 0.3%, other 1.8%, unspecified 0.2%, none 7.4% (2000 census)
Languages(%)Portuguese (official and most widely spoken language); note - less common languages include Spanish (border areas and schools), German, Italian, Japanese, English, and a large number of minor Amerindian languages

Country nameconventional long form: Federative Republic of Brazil
conventional short form: Brazil
local long form: Republica Federativa do Brasil
local short form: Brasil
Government typefederal republic
Capitalname: Brasilia
geographic coordinates: 15 47 S, 47 55 W
time difference: UTC-3 (2 hours ahead of Washington, DC during Standard Time)
daylight saving time: +1hr, begins third Sunday in October; ends third Sunday in February
note: Brazil is divided into four time zones, including one for the Fernando de Noronha Islands
Administrative divisions26 states (estados, singular - estado) and 1 federal district* (distrito federal); Acre, Alagoas, Amapa, Amazonas, Bahia, Ceara, Distrito Federal*, Espirito Santo, Goias, Maranhao, Mato Grosso, Mato Grosso do Sul, Minas Gerais, Para, Paraiba, Parana, Pernambuco, Piaui, Rio de Janeiro, Rio Grande do Norte, Rio Grande do Sul, Rondonia, Roraima, Santa Catarina, Sao Paulo, Sergipe, Tocantins

Legal systembased on Roman codes; has not accepted compulsory ICJ jurisdiction

Suffragevoluntary between 16 and 18 years of age and over 70; compulsory over 18 and under 70 years of age; note - military conscripts do not vote
Executive branchchief of state: President Luiz Inacio LULA da Silva (since 1 January 2003); Vice President Jose ALENCAR Gomes da Silva (since 1 January 2003); note - the president is both the chief of state and head of government
head of government: President Luiz Inacio LULA da Silva (since 1 January 2003); Vice President Jose ALENCAR Gomes da Silva (since 1 January 2003)
cabinet: Cabinet appointed by the president
elections: president and vice president elected on the same ticket by popular vote for a single four-year term; election last held 1 October 2006 with runoff 29 October 2006 (next to be held 3 October 2010 and, if necessary, 31 October 2010)
election results: Luiz Inacio LULA da Silva (PT) reelected president - 60.83%, Geraldo ALCKMIN (PSDB) 39.17%

Legislative branchbicameral National Congress or Congresso Nacional consists of the Federal Senate or Senado Federal (81 seats; 3 members from each state and federal district elected according to the principle of majority to serve eight-year terms; one-third and two-thirds elected every four years, alternately) and the Chamber of Deputies or Camara dos Deputados (513 seats; members are elected by proportional representation to serve four-year terms)
elections: Federal Senate - last held 1 October 2006 for one-third of the Senate (next to be held in October 2010 for two-thirds of the Senate); Chamber of Deputies - last held 1 October 2006 (next to be held in October 2010)
election results: Federal Senate - percent of vote by party - NA; seats by party - PFL 6, PSDB 5, PMDB 4, PTB 3, PT 2, PDT 1, PSB 1, PL 1, PPS 1, PRTB 1, PP 1, PCdoB 1; Chamber of Deputies - percent of vote by party - NA; seats by party - PMDB 89, PT 83, PFL 65, PSDB 65, PP 42, PSB 27, PDT 24, PL 23, PTB 22, PPS 21, PCdoB 13, PV 13, PSC 9, other 17; note - as of 1 January 2009, the composition of the entire legislature is as follows: Federal Senate - seats by party - PMDB 21, DEM (formerly PFL) 12, PSDB 13, PT 12, PTB 7, PDT 5, PR 4, PSB 2, PCdoB 1, PRB 1, PP 1, PSC 1, PSOL 1; Chamber of Deputies - seats by party - PMDB 95, PT 79, PSDB 59, DEM (formerly PFL) 53, PR 44, PP 40, PSB 29, PDT 25, PTB 19, PPS 14, PV 14, PCdoB 13, PSC 11, PMN 5, PRB 4, PHS 3, PSOL 3, PTC 1, PTdoB 1

Judicial branchSupreme Federal Tribunal or STF (11 ministers are appointed for life by the president and confirmed by the Senate); Higher Tribunal of Justice; Regional Federal Tribunals (judges are appointed for life); note - though appointed "for life," judges, like all federal employees, have a mandatory retirement age of 70

Political pressure groups and leadersLandless Workers' Movement or MST
other: labor unions and federations; large farmers' associations; religious groups including evangelical Christian churches and the Catholic Church
International organization participationAfDB (nonregional member), BIS, CAN (associate), CPLP, FAO, G-15, G-20, G-24, G-77, IADB, IAEA, IBRD, ICAO, ICC, ICCt, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, ITUC, LAES, LAIA, LAS (observer), Mercosur, MIGA, MINURCAT, MINURSO, MINUSTAH, NAM (observer), NSG, OAS, OPANAL, OPCW, Paris Club (associate), PCA, RG, SICA (observer), UN, UN Security Council (temporary), UNASUR, UNCTAD, UNESCO, UNFICYP, UNHCR, UNIDO, Union Latina, UNITAR, UNMIL, UNMIS, UNMIT, UNOCI, UNWTO, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WTO
Flag descriptiongreen with a large yellow diamond in the center bearing a blue celestial globe with 27 white five-pointed stars (one for each state and the Federal District) arranged in the same pattern as the night sky over Brazil; the globe has a white equatorial band with the motto ORDEM E PROGRESSO (Order and Progress)

Economy - overviewCharacterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries and Brazil is expanding its presence in world markets. From 2003 to 2007, Brazil ran record trade surpluses and recorded its first current account surpluses since 1992. Productivity gains coupled with high commodity prices contributed to the surge in exports. Brazil improved its debt profile in 2006 by shifting its debt burden toward real denominated and domestically held instruments. LULA da Silva restated his commitment to fiscal responsibility by maintaining the country's primary surplus during the 2006 election. Following his second inauguration in October of that year, LULA da Silva announced a package of further economic reforms to reduce taxes and increase investment in infrastructure. Brazil's debt achieved investment grade status early in 2008, but the government's attempt to achieve strong growth while reducing the debt burden created inflationary pressures. For most of 2008, the Central Bank embarked on a restrictive monetary policy to stem these pressures. Since the onset of the global financial crisis in September, Brazil's currency and its stock market - Bovespa - have significantly lost value, -41% for Bovespa for the year ending 30 December 2008. Brazil incurred another current account deficit in 2008, as world demand and prices for commodities dropped in the second-half of the year.
GDP (purchasing power parity)$1.998 trillion (2008 est.)
$1.901 trillion (2007 est.)
$1.798 trillion (2006 est.)
note: data are in 2008 US dollars
GDP (official exchange rate)$1.573 trillion (2008 est.)
GDP - real growth rate(%)5.1% (2008 est.)
5.7% (2007 est.)
4% (2006 est.)
GDP - per capita (PPP)$10,200 (2008 est.)
$9,800 (2007 est.)
$9,400 (2006 est.)
note: data are in 2008 US dollars
GDP - composition by sector(%)agriculture: 6.7%
industry: 28%
services: 65.3% (2008 est.)
Labor force93.65 million (2008 est.)

Labor force - by occupation(%)agriculture: 20%
industry: 14%
services: 66% (2003 est.)
Unemployment rate(%)7.9% (2008 est.)
9.3% (2007 est.)
Population below poverty line(%)31% (2005)
Household income or consumption by percentage share(%)lowest 10%: 1.1%
highest 10%: 43% (2007)
Distribution of family income - Gini index56.7 (2005)
60.7 (1998)
Investment (gross fixed)(% of GDP)19% of GDP (2008 est.)
Budgetrevenues: NA
expenditures: NA
Inflation rate (consumer prices)(%)5.7% (2008 est.)
3.6% (2007 est.)

Stock of money$95.03 billion (31 December 2008)
$131.1 billion (31 December 2007)
Stock of quasi money$724.5 billion (31 December 2008)
$792.8 billion (31 December 2007)
Stock of domestic credit$1.249 trillion (31 December 2008)
$1.377 trillion (31 December 2007)
Market value of publicly traded shares$589.4 billion (31 December 2008)
$1.37 trillion (31 December 2007)
$711.1 billion (31 December 2006)
Economic aid - recipient$191.9 million (2005)

Public debt(% of GDP)38.8% of GDP (2008 est.)
52% of GDP (2004 est.)
Agriculture - productscoffee, soybeans, wheat, rice, corn, sugarcane, cocoa, citrus; beef
Industriestextiles, shoes, chemicals, cement, lumber, iron ore, tin, steel, aircraft, motor vehicles and parts, other machinery and equipment

Industrial production growth rate(%)4.3% (2008 est.)

Current account balance-$28.19 billion (2008 est.)
$1.551 billion (2007 est.)
Exports$197.9 billion (2008 est.)
$160.6 billion (2007 est.)

Exports - commodities(%)transport equipment, iron ore, soybeans, footwear, coffee, autos
Exports - partners(%)US 14.4%, China 12.4%, Argentina 8.4%, Netherlands 5%, Germany 4.5% (2008)
Imports$173.1 billion (2008 est.)
$120.6 billion (2007 est.)

Imports - commodities(%)machinery, electrical and transport equipment, chemical products, oil, automotive parts, electronics
Imports - partners(%)US 14.9%, China 11.6%, Argentina 7.9%, Germany 7% (2008)

Reserves of foreign exchange and gold$193.8 billion (31 December 2008 est.)
$180.3 billion (31 December 2007 est.)
Debt - external$262.9 billion (31 December 2008)
$240.5 billion (31 December 2007)

Stock of direct foreign investment - at home$294 billion (31 December 2008 est.)
$248.9 billion (31 December 2007 est.)
Stock of direct foreign investment - abroad$127.5 billion (31 December 2008 est.)
$107.1 billion (31 December 2007 est.)
Exchange ratesreals (BRL) per US dollar - 1.8644 (2008 est.), 1.85 (2007 est.), 2.1761 (2006), 2.4344 (2005), 2.9251 (2004)

Currency (code)real (BRL)

Telephones - main lines in use41.141 million (2008)
Telephones - mobile cellular150.641 million (2008)
Telephone systemgeneral assessment: good working system; fixed-line connections have remained relatively stable in recent years and stand at about 20 per 100 persons; less expensive mobile cellular technology is a major driver in expanding telephone service to the low-income segment of the population with mobile-cellular telephone density reaching 80 per 100 persons
domestic: extensive microwave radio relay system and a domestic satellite system with 64 earth stations; mobile-cellular usage has more than tripled in the past 5 years
international: country code - 55; landing point for a number of submarine cables, including Atlantis 2, that provide direct links to South and Central America, the Caribbean, the US, Africa, and Europe; satellite earth stations - 3 Intelsat (Atlantic Ocean), 1 Inmarsat (Atlantic Ocean region east), connected by microwave relay system to Mercosur Brazilsat B3 satellite earth station (2008)
Internet country code.br
Internet users64.948 million (2008)
Airports4,000 (2009)
Pipelines(km)condensate/gas 62 km; gas 9,892 km; liquid petroleum gas 353 km; oil 4,517 km; refined products 4,465 km (2008)
Roadways(km)total: 1,751,868 km
paved: 96,353 km
unpaved: 1,655,515 km (2004)

Ports and terminalsGuaiba, Ilha Grande, Paranagua, Rio Grande, Santos, Sao Sebastiao, Tubarao
Military branchesBrazilian Army (Exercito Brasileiro, EB), Brazilian Navy (Marinha do Brasil (MB), includes Naval Air and Marine Corps (Corpo de Fuzileiros Navais)), Brazilian Air Force (Forca Aerea Brasileira, FAB) (2009)
Military service age and obligation(years of age)21-45 years of age for compulsory military service; conscript service obligation - 9 to 12 months; 17-45 years of age for voluntary service; an increasing percentage of the ranks are "long-service" volunteer professionals; women were allowed to serve in the armed forces beginning in early 1980s when the Brazilian Army became the first army in South America to accept women into career ranks; women serve in Navy and Air Force only in Women's Reserve Corps (2001)
Manpower available for military servicemales age 16-49: 52,523,552
females age 16-49: 52,628,945 (2009 est.)
Manpower fit for military servicemales age 16-49: 38,043,555
females age 16-49: 44,267,520 (2009 est.)
Manpower reaching militarily significant age annuallymale: 1,690,031
female: 1,630,851 (2009 est.)
Military expenditures(% of GDP)2.6% of GDP (2006 est.)
Disputes - internationalunruly region at convergence of Argentina-Brazil-Paraguay borders is locus of money laundering, smuggling, arms and illegal narcotics trafficking, and fundraising for extremist organizations; uncontested boundary dispute with Uruguay over Isla Brasilera at the confluence of the Quarai/Cuareim and Invernada rivers, that form a tripoint with Argentina; the Itaipu Dam reservoir covers over a once contested section of Brazil-Paraguay boundary west of Guaira Falls on the Rio Parana; an accord placed the long-disputed Isla Suarez/Ilha de Guajara-Mirim, a fluvial island on the Rio Mamore, under Bolivian administration in 1958, but sovereignty remains in dispute

Electricity - production(kWh)438.8 billion kWh (2007 est.)
Electricity - production by source(%)fossil fuel: 8.3%
hydro: 82.7%
nuclear: 4.4%
other: 4.6% (2001)
Electricity - consumption(kWh)404.3 billion kWh (2007 est.)
Electricity - exports(kWh)2.034 billion kWh (2007 est.)
Electricity - imports(kWh)42.06 billion kWh; note - supplied by Paraguay (2008 est.)
Oil - production(bbl/day)2.422 million bbl/day (2008 est.)
Oil - consumption(bbl/day)2.52 million bbl/day (2008 est.)
Oil - exports(bbl/day)570,100 bbl/day (2007 est.)
Oil - imports(bbl/day)632,900 bbl/day (2007 est.)
Oil - proved reserves(bbl)12.62 billion bbl (1 January 2009 est.)
Natural gas - production(cu m)12.62 billion cu m (2008 est.)
Natural gas - consumption(cu m)23.65 billion cu m (2008 est.)
Natural gas - exports(cu m)0 cu m (2008)
Natural gas - proved reserves(cu m)365 billion cu m (1 January 2009 est.)
HIV/AIDS - adult prevalence rate(%)0.6% (2007 est.)
HIV/AIDS - people living with HIV/AIDS730,000 (2007 est.)
HIV/AIDS - deaths15,000 (2007 est.)
Literacy(%)definition: age 15 and over can read and write
total population: 88.6%
male: 88.4%
female: 88.8% (2004 est.)

School life expectancy (primary to tertiary education)(years)total: 14 years
male: 14 years
female: 15 years (2005)
Education expenditures(% of GDP)4% of GDP (2004)

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