Macroeconomics
Since 2004, the Brazilian government has taken advantage of good external factors such as the overall growth of the world economy and rising international raw material prices, focused on inflation, implemented tight fiscal and monetary policies, vigorously promoted exports, encouraged companies to increase investment, and stimulated Domestic demand has achieved good results. In 2010, Brazil’s GDP reached 3.675 trillion reais (approximately US$2.1 trillion), a year-on-year increase of 7.5%, the highest growth rate since 1985. On March 29, 2010, the Brazilian federal government announced the second economic growth plan. It is expected that the Brazilian economy will grow at an average annual rate of 5.5% from 2011 to 2014, with the primary fiscal surplus accounting for 3.33% of GDP. The investment-to-GDP ratio in 2010 was 18 %. The plan is expected to invest 958.9 billion reais (1 reai is about 0.60 US dollars) from 2011 to 2014 to build relevant key projects and promote economic growth.
Advantages of attracting investment
The favorable conditions for Brazil’s investment environment include: first, Brazil has a vast territory, rich resources, ranks first in Latin America in terms of economic scale and market size, and has huge development potential; second, the average return on capital of Brazilian banks is as high as 20%; third, , Brazil implements national treatment for all foreign-owned or joint ventures in Brazil. Foreign investment in Brazil does not require prior government approval. As long as foreign exchange is remitted into Brazil through a bank authorized to operate foreign exchange business in Brazil, they can invest and build in Brazil. factories or mergers and acquisitions of Brazilian companies, there are fewer restrictions on profit control and remittance of foreign-funded companies; finally, Brazil has a large population with different levels of consumption levels and habits, and domestic demand is large. In 2010, total household consumption in Brazil reached 2.2261 trillion reais, accounting for 60.6% of GDP. Public administrative expenditure was 778 billion reais, accounting for 21.2% of GDP; fixed asset investment was 677.9 billion reais, accounting for 18.4% of GDP.
Industry Overview
Brazil is one of the world’s major textile and apparel producers. It is the world’s second largest denim producer, the third largest knitted fabric producer, and the fifth largest apparel producer (more than 10 billion pieces in 2005). Brazil has 1.5 million textile and apparel employees and more than 30,000 companies. In 2008, sales of the Brazilian textile and apparel industry were US$43 billion, an increase of 4% from 2007 (US$41.2 billion). At present, the U.S. dollar remains high against the Pakistani currency, which is conducive to the Pakistani textile and apparel industry to explore the international market. In 2008, Pakistan’s textile and apparel industry had a trade deficit of US$2 billion. Its main export markets were Argentina, the United States and Mexico, and its main import sources were China and India. Brazil’s cotton processing industry is very developed and can meet domestic needs, and its cotton fiber has certain competitiveness internationally. Brazil produces 1 million tons of cotton yarn every year, and the raw materials are mainly supplied by the country. Brazil also exports cotton fiber, with annual export volumes ranging from 30,000 to 300,000 tons.
Brazil has a large output of denim. According to statistics from the Brazilian Textile and Apparel Association (ABIT), the monthly output of denim is 45 million meters, of which 10 million meters are exported. There are some world-class Brazilian textile and apparel companies, such as Coteminas, Vicunha, Marisol and Guararapes. Compared with the more developed cotton textile industry, Brazil’s chemical fiber industry is relatively weak, and the trade deficit in man-made fibers continues to increase.
Production and Financing
The World Bank believes that the problem in Brazil’s investment environment is the lack of reliable legal guarantees for investment in the infrastructure field. Brazil’s telecommunications, energy and transportation markets have yet to develop clear laws and regulations and remain unattractive to entrepreneurs looking to invest in infrastructure. Foreign companies enjoy national treatment in Brazil, but Brazilian loan interest rates are very high. The current annual base interest rate is 8% (June 2012). Chinese companies generally will not apply for real loans in Brazil. The water price in Brazil is determined based on the amount of water used, and industrial water is 5.46 reais/cubic meter. Electricity prices vary slightly across Brazil. For example, the domestic electricity price in Rio de Janeiro is 0.40499 reais/kWh, and the industrial electricity price is 0.38796 reais/kWh. Brazil’s overall labor supply is sufficient, but it mainly lacks high-skilled labor. In 2011, Brazil’s unemployment rate was 6%.
