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thE BRAZILIAN BUSINESS ENVIRONMENT: REALITY AND CHALLENGES
THE BRAZILIAN BUSINESS ENVIRONMENT: REALITY AND CHALLENGES
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The growth of the Brazilian economy in the past decade and changes to the consumption pattern
Percentage aggregated to the Brazilian GDP by sector
Period
Agriculture
Industry
retail and Services
1996
5.51
25.98
68.50
1997
5.52
25.66
68.82
1998
5.47
25.95
68.58
1999
5.60
27.73
66.67
2000
5.60
27.73
66.67
2001
5.97
26.92
67.10
2002
6.62
27.05
66.33
2003
7.39
27.85
64.77
2004
6.91
30.11
62.97
2005
5.71
29.27
65.02
2006
5.48
25.57
58.48
2007
5.56
27.81
66.63
2008
5.91
27.90
66.18
2009
5.63
26.83
67.54
2010
5.30
28.07
66.63
2011
5.46
27.53
67.01
Source: IBGE
Before analyzing the changes to the Brazilian household consumption pattern, it is important to address first the causes of this economic improvement. After Brazil’s economic stabilization with the creation of a new currency, the Real, in the 90s, the country was able to start a new growth stage. The end of inflation and the insertion of the targeting regime for price variation, the adoption of targets for the primary surplus, restructuring of the banking system, the fiscal responsibility law and economic liberalization were the basis for the country project itself in the future and not only resolve situational problems. Additionally, at the beginning of the 2000s, a new economic power emerged: China. The Chinese growth, especially from the export of products with low added value, provided the world an increase in the global demand for raw material, with emphasis on the material increase in commodities prices (oil, steel, soybean, among others), traded mostly in US Dollars. Brazil, a country which exports mostly commodities, benefited, to a large extent, from this change in the world’s scenario. It is worth to mention that in 2002, with investors’ distrust in the new left-wing government, the Real surpassed R$ 4.00 for each US Dollar. That is, the export sector, on one side, benefited from the increase in commodities prices and, on the other side, from the depreciation of Real, which further increased the gains. From this moment on, the Government could put some economic policies into practice to speed up the pace of growth. On the monetary aspect, Brazil’s Central Bank made two important achievements: greater accumulation of international reserves and reduction of the base interest rate. On the tax aspect, the Government increased income distribution through social programs, with emphasis the Bolsa Família (Family Allowance), but also managed to reach the targets for the primary surplus, i.e., making savings that enabled it to pay the public debt interest.