Brazil displays resilience and potential amid global challenges

• The world’s ninth largest economy is showing robust growth
• The central bank successfully won the battle against the double-digit inflation, but inflation is 
  expected to remain sticky
• Brazil has major commodity opportunities in the offing, but must also deal with deindustrialisation
• Credendo is publishing this analysis on the eve of the Belgian Economic Mission to Brazil, chaired by HRH Princess Astrid 

A Credendo delegation will attend the Belgian Economic Mission to Brazil, between 22 November and 1 December 2024 in São Paulo and Rio de Janeiro. This poses the perfect opportunity to meet  with local communities, authorities and companies, as well as to accompany our clients and prospects on this gigantic market.

As the largest economy in Latin America, Brazil demonstrates resilience and potential in a complex global landscape. Following the Covid-19 crisis, Brazil’s economy has shown impressive recovery, with real GDP growth averaging 3.6% between 2021 and 2023.

“Brazil is already an important commercial partner for Belgium, being our 17th client with exports of goods for EUR 4.9 billion, and our 31st supplier for EUR 2.4 billion of imports in 2023. With this mission, we hope to strengthen our commercial ties with this Latin America’s giant”, said Nabil Jijakli Deputy CEO of Credendo. 

Strategic reforms and future economic drivers

Economic growth is expected to level out to 2.3% in the medium term, due to high interest rates and structural challenges like outdated infrastructure and high trade barriers. However, the tax simplification reform of 2023 is expected to stimulate growth. Brazil’s broad range of commodities, especially for the green transition, also presents significant potential. Its development of critical minerals and the world’s third-largest reserves of rare earth elements could position the country as a key player in the green economy.

Despite strong prospects, Brazil is vulnerable to natural disasters from droughts to floods, ongoing inflation risks and a rising public debt burden projected to approach 100% of GDP by 2029. The central bank successfully won the battle against double-digit inflation, yet currency volatility and global economic uncertainties indicate that inflation may remain a long-term challenge. However, there are mitigating factors, such as manageable public interest payments and the fact that almost 90% of debt lies in domestic hands.

Major commodity opportunities despite deindustrialisation

As the leading exporter of soybeans, sugar, beef, poultry, coffee, corn, ores and metals, Brazil plays a critical role in global supply chains. Besides exporting rare earth minerals, the country is the fifthlargest lithium and copper producer in the world. This leading position highlights Brazil’s potential in the green energy transition. Since 2018, it has also been a net fuel exporter and is the second-biggest oil exporter in Latin America, after Mexico. 

However, Brazil is facing a deindustrialisation challenge, with manufacturing exports shrinking to just a fifth of current account revenues by 2023, while imports, especially from China, are rising steadily. This trend has weakened Brazil's manufacturing competitiveness, and higher import tariffs may worsen this in the medium term. Diversifying away from commodities will be critical, as an excessive reliance would leave the economy vulnerable to a commodity downturn. Environmental issues, such as Amazon deforestation for agriculture and mining, are also raising concerns globally, with potential regulatory impacts like the EU’s proposed deforestation law in 2025.

A path forwards with structural resilience

While challenges remain, Brazil’s resilience, resources and reform momentum signal a future of opportunities. Credendo’s short-term political risk rating is favourable in category 2 and its medium- to long-term political risk rating (upgraded in 2022) is moderate in category 4¹. The outlook is stable. 

Despite the challenges, it’s clear that, by investing in Brazil, Belgian companies are opting for one of the most promising and resilient countries in Latin America.

Read our full analysis here.

Spokesperson:                
Nabil Jijakli                    
Deputy CEO                    
rue Montoyerstraat 3                
1000 Brussels                    
E n.jijakli@credendo.com
M +32 478 25 11 33

Press contact:
Hélène Leto
Head of Communication
E h.leto@credendo.com
M +32 478 73 01 89

¹ On a rating scale from 1 to 7, with 1 being the lowest risk category.