Brazil's Economy: South America's Giant

Brazil is the largest economy in Latin America and one of the ten largest in the world. For American readers, the easiest way to picture it: Brazil has about 215 million people — roughly two-thirds the U.S. population — in a country slightly larger than the contiguous United States. Brazil is best known for agriculture, mining, oil, and a massive domestic consumer market that runs on its own internal dynamics more than on exports.

This is a plain-English tour written for American readers. For the U.S. picture, see The State of the U.S. Economy and the broader Economy hub. For other countries, see the country economies index.

How big is the Brazilian economy?

For example, Brazil's recent annual GDP has run around R$10.9 trillion, or roughly $2.2 trillion USD, according to the World Bank and Brazil's national statistics office, IBGE. That makes Brazil about one-twelfth the size of the U.S. economy by output. GDP per person sits around $10,000 USD — much lower than the U.S., though the cost of living is also much lower.

The official Brazilian numbers are published by IBGE (Instituto Brasileiro de Geografia e Estatística), and the central bank publishes financial statistics through the Banco Central do Brasil.

The biggest industries

Brazil has one of the most diversified economies in the developing world. The main pillars:

• Agriculture and agribusiness — Brazil is the world's largest exporter of soybeans, beef, sugar, coffee, and orange juice, and a top global producer of corn, cotton, and poultry.
• Mining — Vale is one of the world's largest iron-ore producers; Brazil is also a major producer of bauxite, niobium, and gold.
• Oil and energy — the state oil company Petrobras runs large deepwater fields off the Atlantic coast. Brazil is a major oil producer and exporter.
• Manufacturing — cars, aircraft (Embraer, the world's third-largest commercial-aircraft maker), trucks, machinery, and consumer goods, mostly for the domestic market and other South American countries.
• Services — banking, retail, telecom, and a growing tech sector centered in São Paulo.
• Hydropower — Brazil generates a large share of its electricity from hydroelectric dams, including Itaipu, one of the largest in the world.

Compared to many emerging economies, Brazil has a relatively small share of GDP coming from exports — around 18%. The domestic market does most of the work.

Currency and the central bank

Brazil uses the Brazilian real (BRL), often written as R$. One U.S. dollar typically buys somewhere between R$4.50 and R$6.00, depending on the exchange rate. The real has been a freely floating currency since 1999.

The Banco Central do Brasil is Brazil's central bank. It targets inflation at around 3% per year (a bit higher than the U.S. Federal Reserve's 2% target) and sets a benchmark interest rate called the Selic. Brazilian interest rates have historically been much higher than U.S. rates, partly to fight a long history of inflation.

Trade with the United States

The U.S. and China are Brazil's two largest trading partners and trade roughly comparable amounts with Brazil. Total U.S.-Brazil trade runs around $90 billion USD per year combined. Brazil sells the U.S. crude oil, semi-finished iron and steel, aircraft, coffee, and pulp; the U.S. sells Brazil refined fuels, machinery, electronics, and chemicals. The U.S. side sits at the International Trade Administration.

China has surpassed the U.S. as Brazil's largest single export destination, mostly buying soybeans, iron ore, and oil.

Inflation and interest rates

Brazil spent decades fighting very high inflation, including a hyperinflation episode in the early 1990s. The 1994 Plano Real stabilized prices and replaced earlier currencies with today's real. Since then, the Banco Central do Brasil has run an inflation-targeting regime that has kept prices much more stable. Interest rates remain high by U.S. standards, partly because investors still demand a premium for emerging-market risk.

Cost of living

Cost of living in Brazil varies. São Paulo and Rio de Janeiro have expensive neighborhoods that rival mid-sized U.S. cities. Most of the country is far cheaper than the U.S. — including in rents, restaurants, healthcare, and domestic services.

How Brazil's economy affects the U.S.

When Brazilian harvests come in strong, U.S. soybean and corn prices feel it. When Brazilian iron-ore output drops, global steel prices rise. Embraer competes with U.S. and Canadian regional aircraft makers. Brazilian financial market stress has historically rippled through other emerging markets and into U.S. investment portfolios.

Regions and the South-Southeast concentration

Brazil is highly regionally divided. The Southeast — São Paulo, Rio de Janeiro, Minas Gerais, Espírito Santo — holds about 42% of Brazil's population and produces more than half of national GDP. São Paulo is the financial and industrial capital, with Latin America's largest stock exchange and a corporate culture closer to New York than to most of the rest of Brazil. The South — Paraná, Santa Catarina, Rio Grande do Sul — is wealthier per person and more agriculturally productive. The Northeast is poorer, with a heavy reliance on agriculture, tourism, and federal social programs. The North is dominated by the Amazon basin, with smaller cities, mining, and an economy shaped by the rainforest. The Center-West — Mato Grosso, Goiás, the Federal District around Brasília — is Brazil's agricultural frontier.

Government, social programs, and the political cycle

Brazil runs one of the largest social programs in the developing world — Bolsa Família — which provides cash transfers to tens of millions of low-income households tied to keeping children in school and up to date on health checks. The program is widely credited with reducing poverty over the past two decades. Brazilian fiscal policy swings with the political cycle, and government debt has trended higher in recent years. The Banco Central do Brasil and the Treasury are the main institutions to watch.

A note on the numbers

Numbers in this article change every quarter. Always check the latest from the World Bank Brazil profile, the International Monetary Fund, the Banco Central do Brasil, and IBGE for the most current data.