Brazil today: economic and financial context

Feb 28, 2020

The article shows the economic and financial conditions of Brazil today.

2020 is a very different year. The country has already recovered from high-interest rates that had reached 14% about 3-4 years ago. Today, this stands at 4.5%, the lowest percentage Brazil has ever had in its history. Brazil is not like Argentina when we talk about inflation. Argentina has a rate of 50% as opposed to 3.5% of Brazil, which has in its favor more important monetary reserves. Brazil and Argentina are extremely different realities.

In November 2017, was approved reforms on labor and pension laws. Another phase on which the government is debating is tax reform. With these reforms and all the macroeconomic information, it is possible to see a country that is changing and taking new forms.

brasile oggi-1

Where is Italy in the economic and financial context of Brazil?

Italy is Brazil’s second-largest trading partner and is becoming the first on an annual basis.

What are the main areas of interest and the prospects?

The areas of interest in Brazil are many and all extremely stimulating. For example, renewable energy is a sector that is growing by 600%.  Fintech still sees 45 million people without a bank account. Also, the digital market is growing much, and Goldman Sachs estimates that the market volume will be 24 billion dollars between now and the next 10 Years.

Brazil is a country based on IoT, The Internet of Things, on the development of smart cities and is slowly entering the agricultural sector. A significant area, as Brazil is the world’s leading producer of meat, chicken, sugar, orange juice and much more. In this context, the agricultural sector is as functioning as Spain and Portugal combined. Besides, new technologies are developing in which Italian companies are already operating on a large scale. 

In Brazil today, there are 120 million users who use the internet daily and about 58 million online buyers, which equates to the entire Italian population. There are opportunities in the pharmaceutical, automotive, energy, and renewable energy sectors. Areas such as digital security and home automation are also growing. The fields of technology have had a notable development in Europe in recent years. Now is also being applied in a country as large as a continent, such as Brazil.

brasile oggi-2Is there a geographical mapping of opportunities? What are the main opportunities in Brazil?

Given brazil has a big size, the opportunities that you can identify in the south are different than those that are identified in the north.

The state of Sao Paulo is super industrialized. Much of Brazil’s GDP is in here. The boat company Azimut has settled in the south of Brazil where it has found a right environment and here has created an induced manufacturer that supports the construction of luxury yachts. In the north-east of the country, on the other hand, there are many wind farms.

Brazil has an energy matrix opposed to Italy. Despite what can be said, sometimes themes such as fires in the Amazon are exploited, Brazil is an environmentally friendly country. It produces 80% of energy from renewable sources. There are much of opportunities in this area. 

What is the presence of the Italian System in Brazil?

Brazil is one of the few countries in which the Italian System is very articulated. There’s the Italian Embassy, there are several Consulates , the Italian Trade Agency, and the Chambers of Commerce. In Sao Paulo is present also SACE that it has been operating push strategy policies with Braskem (chemical) and Nexa (mining)

Finally, there is a scientific and cultural director.

brasile oggi-3In addition to those already present, which are the Italian companies that can look to the country as an investment? SMEs too?

Among the absent big names are ERG and SNAM. In the coming years, there will be a progressive liberation of the gas market with excellent chances of being able to invest. Also, with the privatization of airports, ENAV could enter. And following all the sectors mentioned above, all Italian SMEs have the opportunity to invest in Brazil today. Companies that bill € 5 million have opened a branch in Brazil and are finding satisfaction by selling and distributing their products in the market.

 

There is no such thing as a dimensional constraint of enterprise: even those with a small turnover can invest in Brazil and do good business. It depends a lot on the degree of the entrepreneur’s propensity to invest abroad. It doesn’t have to be a necessity, but it has to be an opportunity to grow the business and make it last over time.

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