International review: Republic of Brazil
In the new material of International Review series, we will talk about the largest state in South America, one of the members of the BRICS interstate association and the main producer of oranges in the world – Brazil.
State language: Portuguese. Territory: 8 358 million sq. km. Administrative-territorial division: 26 states and 1 federal district. Capital: Brazilia. Population: 213 993 million people (2021). National currency: Brazilian Real. The Federal Republic of Brazil (Brazil) is a state in South America, which occupies the eastern and central parts of the mainland. Borders with Guvian, Surinam, Gayana, Venezuela, Colombia, Peru, Bolivia, Paraguay, Argentina, Uruguay. The length of the land borders is about 16 thousand km. From the east it is washed by the Atlantic Ocean. The country owns several islands. The length of the coastline is 7.4 thousand km. The largest cities of Brazil: Brazilia (2.46 million people), Rio de Janeiro (6.1 million people), San Paulo (10.9 million people).
Interesting fact: Brazil is the largest South American state in square and population. In this country alone, South America speaks Portuguese, and not in Spanish
Brazil is a federal republic with a civilian form of government, enshrined in the eighth edition of the Constitution (1988). The President is the head of state, the government and the commander in chief of the armed forces. It is elected once every 4 years by direct general voting. The President independently appoints ministers, runs the entire federal administration, sign and publishes laws. Legislative power belongs to the parliament - the National Congress. Congress members are elected by direct secret vote. The term of powers of deputies is 4 years, senators - 8 years. The population of Brazil at the end of 2021 amounted to 214.1 million people.
Main religions: Christianity, Buddhism, folk beliefs. The country has a large number of non-religious and atheists. Along with the Portuguese, the Spanish, German, Italian, Japanese, Ukrainian, English and Indian languages are used. The country is the largest in the world in the number of Catholics.
What resources Brazil is rich in
Brazil ranks second in the world after Russia in stocks of forest resources. The area of the forests of the Amazon is 5 million sq. km. A quarter (about 50 thousand) of all plant species known to science is growing in the country. Now more than a third of the Amazon jungle is degrading due to anthropogenic exposure. According to researchers, the area of dying forests of the Amazon today is ten times more than the territory of Great Britain. Actively struggle to cut down forests. Government raids are held against illegal foresters. In 2022, the deforestation indicator in Brazil decreased by 11% compared to the previous year.
Interesting fact: in Brazil there are two of the seven modern wonders of the world-the statue of Christ in Rio de Janeiro and the Amazon River
Brazil is a leader in the region for the extraction of mineral fossils. It takes 2nd place in the reserves of iron ore, 3rd place in the reserves of manganese ore. Aluminum, zinc, tungsten, nickel, titanium ores are also mined in the country. Brazil has large uranium deposits. The country is rich in minerals such as tantalled, thorium, zirconium, beryllium, niobium. In the south of Brazil is one of the largest gold deposits, included in the five largest in the world. In addition to gold, in Brazil, many precious and semiprecious stones are mined: emeralds, sapphires, aquamarine, amethyst, rock crystal and diamonds.
BRAZILIAN ECONOMY 2022
Experts believe that the gross domestic product of Brazil at the end of 2022 increased by 3%, which is significantly higher than the predicted 0.3%. Inflation was 5.8%, which is almost twice as high as the level planned by the government. Gold exchange reserves are estimated at $362 billion.
The Brazilian economy is firmly included in the top ten economies of the world and is the largest in Latin America. The most developed sectors of the economy include: agriculture, industrial production, mining industry and services sector. The industry of Brazil mainly consists of automotive, textile and shoe industry, cement, aviation industry, and consumer goods, computers.
WHAT COUNTRIES DO BRAZIL TRADE
China is a key importer of Brazilian products (the share in export is 31%), despite a significant fall according to the results of the last three years. Further follow the United States (11%) and Argentina (5%). The country is actively trading with the countries of the European Union, South America, the Pacific region, Canada and India. Trade between Brazil and the USA in 2022 reached a historical level of $88.7 billion according to Brazil-US Trade Monitor. In 2022, Brazilian imports from North America reached a record $51.3 billion, increasing by 30% compared to the previous year. This growth is largely explained by rising prices, especially for fertilizers, fuel and coal. The export of Brazil in the United States increased by 20% compared to 2021, reaching a value of $37.4 billion.
Interesting fact: Brazil for more than a century is a world leader in the production and export of coffee. Here they collect a third of all coffee beans in the world
The turnover of Brazil with the countries of the League of Arab states has grown significantly. According to the results of 2022, it amounted to $32.8 billion, and the surplus in trade exceeded $2.7 billion. Export grew by 23%, including due to increasing the supply of agricultural products (sugar, poultry and beef, corn, soybeans). The key trading partners of Brazil in this region are the UAE, Saudi Arabia, Egypt, Algeria, Bahrain, Morocco, Oman and Qatar. Import from Arab states increased 1.5 times.
The main export positions include ores, slag and ash, grain, seeds and fruits, mineral fuel, oil products, meat and edible offal, iron and steel, mechanical engineering, sugar, coffee. Import is formed mainly due to mineral fuel, petroleum products, mechanical engineering, electronics, fertilizers, vehicles, drugs, pharmaceutical products.
WHAT IS PRODUCED IN BRAZIL
Agriculture. Brazil occupies one of the leading positions in the world in the export of agricultural products. It is the largest manufacturer and exporter of a number of agricultural products: coffee, sugarcane, soybean, corn, cocoa, bananas and cotton. The main consumer cultures of Brazil are wheat, corn and Fig. Brazil’s livestock is predominantly meat. The country has the largest commercial herd of cattle in the world and is the largest manufacturer and exporter of beef, soy, leather and animal skins, chicken meat. The gross value of the agricultural products of Brazil in 2022 reached 1.2 trillion Brazilian Real. According to the Ministry of Agriculture of the country, this is the second largest indicator for a 34-year period. The revenue from the cultivation of agricultural crops amounted to 814.77 billion Brazilian Real, and 374.27 billion Brazilian Real from animal husbandry. The export of cotton, coffee, corn, wheat and milk reached a historical maximum in 2022. Arab countries are the main buyers of Brazilian food.
Interesting fact: Brazil is the world leader in the production of sugar and the cultivation of oranges, as well as the largest exporter of soybeans on the planet
Brazilian industry. The country has a well-diversified and developed industrial sector, which accounts for about 20% of the country's GDP. The largest enterprises are concentrated in the southeast. The main industries are energy, mining, chemicals, automotive and light. Argentina is the main buyer of Brazilian manufactured goods. Now the countries are discussing the idea of creating a single common currency to remove trade barriers, given the shortage of US dollars in Argentina. The new currency could create the second largest currency bloc in the world.
Interesting fact: Brazil has the second largest hydroelectric power plant in the world – Itaipu
Energy and mining in Brazil. The country is in the TOP-5 largest countries in the world in terms of hydropower potential. About 90% of the country's electricity is produced at environmentally friendly hydroelectric power plants. Alternative sources such as firewood, coal, nuclear power plants are also used. There are vast reserves of oil, natural gas and coal. The Brazilian National Electricity System (SIN Brazil) includes the interconnected regional power systems: South, Southeast, Central West and Northeast, as well as North. More than 40 types of minerals are mined in Brazil. Despite the rich resource base, the share of this industry in Brazil's GDP is small. The extraction of manganese and iron ore, bauxite, zinc, copper, nickel, tungsten, niobium, zirconium, mica, gold, silver, tin, diamonds and asbestos is developed. Over 80% of iron ore is exported. Zinc, copper and nickel are mined for the domestic market.
Interesting fact: Brazil is the largest market for renewable energy in Latin America, as well as the largest producer of fuel from sugar cane, which can be used instead of petroleum products
Brazil is the largest producer of biofuel, bioethanol, after the United States. The raw material for its production is sugar cane. About 30% of the country's fuel needs are met by ethanol. For refueling, pure ethanol, mixtures with gasoline and diesel fuel are used. Every year, Brazil produces 1.5-2 million cars and buses of Scania, Mercedes-Benz and Fiat brands. The aviation industry is represented by its aircraft manufacturing conglomerate Embraer. This is one of the leaders in the world market of passenger regional aircraft. The headquarters is located in the city of Sao Jose dos Campos, state of Sao Paulo. Today, it competes primarily with the Canadian company Bombardier, which, along with Embraer, claims to be the third largest aircraft manufacturer after Airbus and Boeing.
Interesting fact: Brazil occupies one of the key positions in the world in the export of aircraft, fourth in the world in the construction of ships
Brazil is a major producer of textiles, clothing and footwear. The main branch of light industry is textile. Brazil ranks among the top 7 countries in the world for the production of textiles. 80% of cotton in Brazil is imported. The footwear industry is developed in the country; more than four thousand footwear factories operate here.
HOW THE TOURISM AND SERVICE SECTOR IS DEVELOPING IN BRAZIL
Many types of services are well developed in the country: public catering (more than 1 million establishments), hotel industry, services for holding international meetings and negotiations; leisure industry, tourism, etc. Tourism plays a special role for the country, including beach, entertainment, sports, sightseeing, business, recreational and educational. Both domestic and international tourism is developed. Tourists are attracted by carnivals, the famous statue of Christ the Savior, the popular Copacabana beach and the sights of Rio de Janeiro.
Interesting fact: The Brazilian carnival is listed in the Guinness Book of Records as the largest in the world. It is a business with a turnover of 2.1 billion euros, annually attracting about 3 million participants
Each foreign tourist leaves at least $75 in Brazil. per day. About 22% of visitors to Brazil visit it for business and official purposes, 5% - to participate in international negotiations. The main flow is made up of tourists from the USA, Canada, EU countries, Uruguay, Paraguay, etc. The export of tourist services (sale of tourist visas, vouchers, transport tickets, etc.) is one of the main export items of Brazil, ranking third after the export of coffee, soybeans and iron ore. Citizens of the Republic of Belarus do not need a visa to visit Brazil. Under the visa-free regime you can stay in the country for up to 90 days.
TOP 10 LARGEST COMPANIES OF BRAZIL
- Vale is a steel and mining giant that is the world's largest producer of iron ore and nickel. In addition, it is the operator of hydroelectric power plants, railways and ports. Considered the most valuable company in Latin America (market value $73.03 billion).
- Petróleo Brasileiro is the largest oil producer in Brazil, produces fertilizers, biofuels (market value of $69.84 billion).
- Nu Holdings Ltd. is a financial banking company (market capitalization $43.137 billion).
- Ambev is the brewing company that produces most of the country's liqueurs, and also bottles and distributes PepsiCo products throughout much of Latin America. Ambev is an important part of Belgian beverage giant Anheuser-Busch InBev, which is one of the world's top 100 companies ($43.87 billion market value).
- Itaú Unibanco Financial is the largest bank in the Southern Hemisphere (with a market value of $41.65 billion).
- Banco Bradesco is a Brazilian banking company, the third largest in Brazil. Provides banking and insurance services. Is included in the hundred largest banks in the world (market value of $34.16 billion).
- Klabin is a paper company headquartered in Brazil (Market capitalization $24.770 billion).
- WEG is a Brazilian company operating worldwide in the field of electrical engineering, energy and automation. The company, headquartered in Jaragua do Sul, manufactures electric motors, generators, transformers, drives and coatings (market value $29.43 billion).
- Banco Santander Brasil is the Brazilian subsidiary of the Spanish financial corporation (market value $24.70 billion).
- Safra Group consists of over 200 first-class commercial, residential, retail and agricultural properties worldwide. The company's total assets are 192.4 billion Swiss francs. The headquarters is in Brazil.
WHO INVESTS IN THE BRAZIL ECONOMY
Brazil ranks 4th in the world foreign direct investment rankings for 2021 and 2022 according to the World Bank report. The country leads in terms of net investment inflow to GDP among the 15 largest economies in the world. In the first five months of 2022 alone, Brazil attracted $39.7 billion in investment, up 1.5 times compared to the same period of 2021. Obviously, the country is in the best position for the last decade in terms of FDI inflows. The Brazilian government encourages and promotes foreign investment using such instruments as tax preferences, concessional lending, interstate agreements to avoid double taxation, support in the stock market, and privatization of large Brazilian companies.
There are areas of economic activity in which the participation of foreign capital is limited by law: exploration, production and refining of oil; commercial air transportation; coastal sailing; mass media, etc. Foreign investments must be registered with the Central Bank, after which the investor receives a registration certificate that gives the right to transfer profits abroad, reinvest profits, and repatriate capital.
HOW FREE TRADE ZONES AND SEZ ARE DEVELOPING IN BRAZIL
Brazilian Free Trade Zones, also known as Export Processing Zones (EPZ), are the best choice for business owners and foreign investors when setting up a business in Brazil. They were created in 1988 at the initiative of the Brazilian government with the aim of diversifying the economy, attracting foreign investors and business owners to Brazil. Currently there are 16 such zones in 15 states of Brazil. Free trade zones serve as a platform for the free flow of goods from the domestic market into the international trading environment. Government-provided tax incentives help business owners improve their export competitiveness and benefit international trade. 80% of goods produced in EPZ must be exported outside the country, while 20% can be used for domestic consumption. In June 2022, changes were made to the operation of Free Trade Zones. The new legal regime provides for the cessation of export obligations, allowing all products to be sold on the domestic market, provided that they are subject to taxation as domestic products. Also, companies are allowed to work with fiscal incentives within the free trade zone if their activities contribute to industrialization or they produce export-oriented products.
In Brazil, there is a free economic zone Manaus. Manaus was created in 1967 with the aim of developing an industrial, commercial and agricultural center in the inner Amazon, taking into account local factors and a large distance from the centers of consumption of products. On the territory of FEZ Manaus enterprises are provided with the following tax and financial benefits: exemption from paying tax on the import of imported goods intended for consumption inside the free zone; reduction of the tax rate on imported goods used for the production of industrial goods in FEZ with their subsequent sale in other regions of the country; exemption from the tax on industrial products of consumer and industrial goods produced in the free zone; exemption of enterprises from paying income tax for a period of 10 years; exemption of enterprises from paying export tax; and other benefits.
RELATIONS BETWEEN BRAZIL AND BELARUS
In 2021, the turnover between countries amounted to $783 million (growth rate of 109%). The basis of trade is Belarusian export (over $580 million). It includes agricultural machinery, nitrogen and potassium fertilizers and oil products. Embraer passenger aircraft, coffee, tea, nuts, fruits, spices, juices, drugs, meat are imported from Brazil. The volume of bilateral trade in services in 2021 amounted to $118 million (growth of 2.2 times), from which Belarusian exports - $114 million. The basis of the Belarusian service exports was transport and expedition services, as well as insurance services. The framework of the development of bilateral cooperation between Belarus and Brazil since 2019 has been negotiating the prospects for the development of cooperation in the field of exploration, oil refining and mining industry.
In 2021, the export of residents of FEZ Grodninvest to Brazil amounted to $173 thousand and was formed by the supply of chemical products. Metal products, rubber threads are imported by the residents of FEZ. In 2022, the leadership of the administration and resident enterprises of FEZ Grodninvest took part in the webinar for the export of Belarusian products to the markets of Latin America, including through the Internet platform of Mercado Livre Brasil.