Estudios económicos


Population 207.7 million
GDP 9,896 US$
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major macro economic indicators

  2016 2017 2018 (e) 2019 (f)
GDP growth (%) -3.3 1.1 1.1 0.8
Inflation (yearly average, %) 8.7 3.4 3.7 4.2
Budget balance (% GDP) -9.0 -7.8 -7.1 -6.0
Current account balance (% GDP) -1.3 -0.5 -0.8 -1.2
Public debt (% GDP) 70.0 74.0 77.2 78.0


(e): Estimate. (f): Forecast.


  • Varied and rich mineral resources and agricultural harvests
  • Well-diversified industry
  • Improving institutional transparency following recent corruption scandals
  • Strong foreign exchange reserves (import coverage of roughly 26 months)


  • Very sensitive fiscal position
  • Infrastructure bottlenecks
  • Low level of investment
  • High cost of production (wages, energy, logistics, credit) harming competitiveness
  • Shortages of qualified labour; inadequate education system

Risk assessment

Activity expected to gain some strength

The economy registered a second year of mild recovery in 2018. Household consumption contributed positively to GDP, as inflation remained well anchored, the policy rate reached historical minimum, and the unemployment rate continued to improve (despite remaining high). Moreover, exports benefited from better terms of trade (oil and manufacturing prices). Nevertheless, a strong rebound in gross fixed investments failed to materialise, as idle capacity remained elevated, and political uncertainties were high in light of the October 2018 presidential elections. Activity was also hit by a 10-day lorry drivers’ strike, which paralysed the economy in the last days of May.

A relatively higher economic momentum is expected in 2019, as political uncertainties dissipate and job market recovery continues (supporting stronger household consumption). Inflation will remain close to the central bank’s target (4.25% for 2019). Some monetary tightening might be implemented in the second half of the year, as advanced economies (notably the United States) raise their policy rates. Downside risks are related to an escalation of the US-China trade war, the latter the main destination of Brazil’s exports. Moreover, the continuing crisis in Argentina (Brazil’s third-largest export partner) will continue to hamper the performance of manufacturing exports in 2019. Domestically, a failure to address the pension system reform this year could jeopardise the stronger economic momentum.

Sound foreign positions diverges from the challenging fiscal stance

In 2018, the country’s current account deficit reported a marginal widening, underpinned by a large trade surplus. FDI (mainly in manufacturing industries like coke, oil derivatives and biofuels, automotive, and food) cover more than three times the external deficit. In 2019, although the current account deficit is likely to further deteriorate as economic activity improvement raises imports, the worsening should be moderate.

The framework is much different when it comes to the fiscal stance. The country has registered primary fiscal deficits (before interest payments) for the last five years in a row. This imbalance is mainly attributed to social security expenses, which have increased exponentially, reaching a deficit of roughly 2.8% of GDP. The new government, which took office on January 1, 2019, will focus on a social security reform. Nevertheless, even if the fiscal deficit is expected to narrow in 2019, the government’s campaign promise to reduce the imbalance to zero this year is not feasible.

A far-right President takes office

As widely anticipated, the far-right candidate Jair Bolsonaro from the Social Liberal Party (PSL) won the race runoff presidential elections at the end of October 2018. Mr Bolsonaro is a former military officer that has been a member the Chamber of Deputies since 1991, and was the most-voted congressman in the state of Rio de Janeiro in 2014. He will need to deal with a much polarised country that is facing a rising violence, and where the scars of the deep 2015/16 recession – when GDP dropped by 7% – remain visible (there are still roughly 12 million unemployed people in the country). Moreover, he won the presidential elections with the highest rejection rate since Brazil came back to democracy (approximately 39%). This pushback against Mr Bolsonaro among part of the population – and even outside the country – is underpinned by the controversial speeches that have marked his political career.

The initial economic response to his victory has been positive, mainly due to Paulo Guedes, who took office as the new Minister of the Economy. Mr Guedes is a well-known Brazilian liberal economist who defends the formal independence of the central bank, the privatisation of state-owned companies (using the resources to reduce public debt), and proposes a capitalisation system for social security. In terms of foreign policy, Mr Bolsonaro intends to focus on bilateral trade deals, as well as making Mercosur more agile and allowing its members to negotiate free trade agreements bilaterally. It is worth nothing, however, that this honeymoon with the financial market could prove short-lived if the new administration fails to address the social security reform. The new economic team committed to this task will need to prove its ability to negotiate in a highly fragmented Congress and create coalitions. Although PSL registered a stronger than expected showing in the legislative elections (52/513 seats in the Lower House and 4/81 in the Senate), it failed to reach majority. Constitutional amendments (such as the pension reform) require 308 votes in the Lower House and 49 in the Senate to be approved.


Last update: February 2019




Bills of exchange (letra de câmbio) and, to a lesser extent, promissory notes (nota promissória) are the most common form of payment used in local commercial transactions. The validity of either instrument requires a certain degree of formalism in their issuance. The use of cheques is relatively commonplace – often post-dated in practice and thus transformed into credit payment instruments – and their issuance requires comparable formalism. 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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