Economic Analysis


Population 210.1 million
GDP per capita 8,751 US$
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major macro economic indicators

  2018 2019 2020 (e) 2021 (f)
GDP growth (%) 1.3 1.4 -4.1 4.8
Inflation (yearly average, %) 3.7 3.7 3.2 6.8
Budget balance (% GDP) -7.1 -5.8 -13.6 -6.3
Current account balance (% GDP) -2.2 -3.5 -0.5 0.0
Public debt (% GDP) 76.5 74.3 88.8 82.0

(e): Estimate (f): Forecast


  • Varied mineral resources and agricultural harvests
  • Large population (estimated at 211.9 million)
  • Well-diversified industry
  • Strong foreign exchange reserves
  • Net creditor in foreign currency


  • Sensitive fiscal position
  • Infrastructure bottlenecks
  • Low level of investment (roughly 19% of GDP)
  • Relatively closed to foreign trade (exports + imports represent only 27% of GDP)
  • High costs of production (wages, energy, logistics, credit) that harm competitiveness
  • Shortage of qualified labour, inadequate education system

Risk assessment

Economy better prepared to operate in an intermittent mode

The economy surprised positively in the first quarter of 2021. GDP rose by 1.2% quarter-on-quarter (QoQ) and 1% year-on-year (YoY), taking cumulative four quarter activity to -3.8%. Looking ahead, activity will be underpinned mostly by the new round of aid to informal workers (restarted in April and to last until at least October 2021) and the economic reopening process. After reaching a weekly record high of over 3,000 COVID-19 deaths per day in mid-April 2021, the country started to bear to first fruits of its immunization program in early July 2021 (when weekly average reached a still high 1,200 death toll). As of 18 July 2021, Brazil had 16% of its population fully immunized, while 44% had received at least one shot. A major downside risk to activity is certainly the new COVID-19 variants. In addition, in recent months, consumer prices have also strongly surpassed the 5.25% ceiling of the central bank´s target. This behaviour is notably explained by commodity prices and supply chain disruptions. As a response, the monetary authorities will continue to retighten the policy rate Selic along H2 2021 (since March 2021 it has moved from a 2% per year record-low to 4.25% as of July 2021). Consequently, higher inflation and relatively tighter credit conditions could undermine household consumption´s recovery. Lastly, Brazil has experienced its worst drought in 91 years: with 63% of the country´s power matrix related to hydroelectric, this has raised electricity tariffs. The effect on economic activity could be more damaging in 2022, if rainfall does not improve in Q4 2021.


Strong external position vs. a base-effect improvement in fiscal deficit

In the cumulative five first months of 2021, the current account deficit continued to narrow compared to the same period of 2020. A stronger trade balance bolstered the outcome, as robust external sales favoured by high commodity prices have prevailed over the resumption of imports. The narrowing of the deficits in the services (driven by lower tourism expenditure and equipment rental) and income (due to the drop in foreign companies’ profits) accounts also contributed positively in the period. On the financing side, foreign direct investment has improved in the same comparison basis, albeit still at 2.6% of GDP in 12 months accumulated as of May 2021 (4.15% of GDP in May 2020). Finally, total gross external debt at May 2021 stood at 20% of GDP, with its public share at 7.8% of GDP. On the fiscal front, the budgetary deficit will narrow in 2021, thanks to rebounding corporate tax revenues and relatively lower fiscal stimulus. Finally, gross public debt has reduced to 84.5% of GDP in May 2021 from the 89.4% of GDP peak reached in February 2021. This has been driven by higher nominal activity (boosted by inflation), which alongside to the state-owned development bank BNDES return of USD 19 billion to the treasury are expected to continue favouring the debt dynamics in H2 2021. Nonetheless, the public debt to GDP ratio will deteriorate in 2022, in the absence of strong fiscal consolidation measures, and as the temporary tailwinds fades.


Political climate has remained tense in 2021

In late June 2021, a Senate committee evaluating the government's handling of the COVID-19 health crisis gained momentum after a congressman and his brother, a Ministry of Health official, denounced possible overpricing and corruption related to the purchase of India’s Bharat Biotech COVID-19 vaccine with the intermediation of a local company. The brothers met with President Bolsonaro in March and, according to them, alerted him to the suspect contract, but nothing was done to investigate (the contract was only suspended after the case became public). In response, at the request of the Supreme Court (STF), the Federal Police opened an investigation into Bolsonaro. However, even if there was a complaint, for the process to be forwarded by the STF, the approval of two-thirds of the Chamber's deputies would be necessary. Bolsonaro would likely have the necessary votes to avoid it. However, the scandal has consequences. According to a survey conducted in early July 2021 by Datafolha, 51% of Brazilians disapproved of the president, the biggest rejection since he took office in January 2019. It is also worth remembering that the country will hold presidential elections in October 2022. There is still no confirmation of official candidates, ex-president Lula (2003-2010) from the leftist PT party may run for office. He has been competitive in the preliminary polls and so far looks like a relevant threat to Bolsonaro's possible re-election. Regarding the reform agenda, the government obtained congressional approval this year for some liberalizing measures, such as the official autonomy of the Central Bank and the bill that allows the privatization of Electrobras. Currently, there are also discussions in Congress on two other reforms: administrative (changes to the rules for new civil servants; limiting job stability for some careers) and tax (including reducing corporate tax rates while creating a dividend tax).


Last updated: July 2021



Bills of exchange (letra de câmbio) and, to a lesser extent, promissory notes (nota promissória) are the most common form of credit note used in local commercial transactions. The validity of either instrument requires a certain degree of formalism in their issuance. The most commonly payment method used in Brasil is “Boleto bancário” which is an official Brazilian payment method regulated by the Central Bank of Brazil. It is a push payment system, which was launched in 1993 and today generates 3.7 billion transactions per year.  The payment process for “Boleto bancário” transactions is similar to that of wire transfer or cash payment methods. Customers are provided with a prefilled boleto bancário payment slip. At this point, the customer has the option of printing the form and paying it physically at any bank branch or at authorized processors such as drugstores, supermarkets, lottery agencies and post offices. Additionally, it can also be paid electronically at any of the more than 48,000 ATMs in Brazil, as well as through internet banking or mobile banking apps, which are widely used in the country. Although the use of the above credit payment instruments for international settlements is not advisable, they nonetheless represent, an effective means of pressure in case of default, constituting an extra-legal enforcement title that provides creditors with privileged access to enforcement proceedings.

The duplicata mercantil, a specific payment instrument, is a copy of the original invoice presented by the supplier to the customer within 30 days for acceptance and signature. It can then circulate as an enforceable credit instrument.

Bank transfers, sometimes guaranteed by a standby letter of credit, are also commonly used for payments in domestic and foreign transactions. They offer relatively flexible settlement processing, particularly via the SWIFT electronic network, to which most major Brazilian banks are connected. For transfers of large sums, various highly automated interbank transfer systems are available, e.g. the STR real time Interbank Fund Transfer System (sistema de transferência de reservas) or the National Financial System Network (rede do sistema financeiro nacional, RSFN).

Debt collection

Amicable Phase

Creditors begin this phase by attempting to contact their debtors via telephone and email. If unsuccessful, creditors must then make a final demand by a registered letter with recorded delivery, requesting that the debtor pay the outstanding principal increased by past-due interest as stipulated in the transaction agreement. In the absence of an interest-rate clause, the civil code stipulates use of the penalty interest rate imposed on tax payments, which is 1% per month past due. When creditors are unable to reach their debtors by phone and/or email, a search of the company’s contacts, partner businesses, and owners is conducted. If there is still no contact, this leads to an investigation of assets, an on-site visit, and an analysis of the debtor’s financial situation so as to ascertain the feasibility of taking legal action. Considering the slow pace and the cost of legal proceedings, it is always advisable to negotiate directly with defaulting debtors where possible, and attempt to settle on an amicable basis, taking into consideration that a repayment plan may last for up to two years.


Legal proceedings

The legal system comprises two types of jurisdiction. The first of these is at the state level. Each Brazilian state (26 states, plus the Distrito Federal of Brasilia), notably including a Court of Justice (Tribunal de Justiça) whose judgments can be appealed at the state level. Legal costs vary from state to state. The second type of jurisdiction involves the Federal Courts. There are five regional Federal Courts (Tribunais Regionais Federais, TRF), each with its own geographic competence encompassing several states. For recourse on non-constitutional questions, TRF judgments can be appealed to the highest court of law, the Superior Tribunal de Justiça (STJ) located in Brasilia.


Monitory Action

The ação monitória is a special procedure that can be filed by any creditor who holds either a non-enforceable written proof, or any proof that is considered as an extrajudicial instrument recognized by the law as enforceable (even if it does not comply with all the legal requirements). If the debtor’s obligation is deemed certain, liquid and eligible, the Municipal Courts usually render payment orders within fifteen days. If the debtor fails to comply within three days, the order becomes enforceable. In cases of appeal, the creditor has to commence formal ordinary legal action. The difference between this procedure and the Enforcement Proceeding lies in the legal requirements and in the possibility of questioning the merit of the obligational relationship by the debtor over the course of the suit. The ação monitória is slower than a regular Enforcement Proceeding: if the debtor presents an objection in the court, the merits of the commercial relation will be thoroughly discussed in the same fashion as a Standard Lawsuit. The estimated period of this lawsuit is on average two years.


Ordinary proceedings

Ordinary proceedings are presided over by an interrogating judge (inquisitorial procedure), and require examination of evidence submitted by each party in conjunction with study of any expert testimony. The creditor must serve the debtor with a registered Writ of Summons, which the debtor must answer within 15 days of receipt. The initial proceedings encompass an investigation phase and an examination phase. The final step of the process is the main hearing, during which the respective parties are heard. After this, a judgement is made by the court. The tribunal may render a default judgment if a duly served writ is left unanswered. It takes two to three years to obtain an enforceable judgment in first instance.

Enforcement Proceeding

On average and within the main states, it takes a year for a judgement to be made following the initiation of legal proceedings.


Court Decision

A final judgment is normally automatically enforced by Brazilian Courts. Since the reforms in 2005 and 2006, attachment of the debtor’s assets is possible if the latter fails to obey a final order within three days. In practice, execution can prove difficult, as there are very few methods for tracing assets in Brazil.

Foreign awards can be enforced if they meet certain conditions: the homologation has to be concluded by the Superior Court to be enforced in Brazil, the parties have be notified, and the award has to comply with all the requirements for enforcement (such as being translated from Portuguese by a public sworn translator).


Extrajudicial Instruments

The enforcement of extrajudicial instruments is a legal type of enforcement granted to the creditor in order to allow him to claim his rights against the debtor. This is the most direct and effective court vehicle to recover credits in Brazil. This lawsuit does not require prior guarantees from foreign creditors (as the bond in the monitory suit for example). Moreover, Brazilian legislation renders some documents enforceable. These are separated in two main categories: Legal enforcement titles (including judgments made by a local Court recognizing the existence of a contractual obligation, and court-approved conciliations and arbitral awards) and extra-legal enforcement titles, which includes bills of exchange, invoices, promissory notes, duplicata mercantil, cheques, official documents signed by the debtor, private agreements signed by debtor, creditor and two witnesses (obligatory)  as an acknowledgement of debt, secured agreements, and so on. It is obligatory to submit the original versions of these documents – copies are not accepted by the court. 

Insolvency proceedings

Out of Court restructuring

Debtors can negotiate a restructuring plan informally with their creditors. The plan must represent a minimum of 60% of the total debt amount. This plan must be approved by the court.


Judicial Restructuring

Debtors make a restructure to the request to the court, or request the conversion of a liquidation request to the court from their creditor(s). If the plan is accepted by the court, debtors typically have 60 days to present a list with all debts from creditors, and a payment plan. A judge then schedules two creditors’ meetings, with the second only occurring if the first one does not take place. During these meetings, the proposed plan must be accepted by a majority of creditors. Once accepted, payments start as decided in the approved plan. The estimated period of this lawsuit is between 5 and 20 years.



The principal stages of liquidation are as follows:

  • liquidation can be requested by either debtors (auto-falência), or any of their creditors if the debt totals more than 40 times the minimum wage;
  • the initiating party must prove the existence of a net obligation, overdue and defaulted by presenting protested enforceable title (special protest – personal notice of debtor);
  • upon analysis of a debtor’s financial situation, the judge can decide that the company must be liquidated.

All of the company’s assets have to be sold and the obtained amount is shared equally between creditors, respecting eventual privileges. The estimated period of this lawsuit is between 7 and 20 years.

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