Brazilian Macro Environment

1179 words, 5 pages

Intro Sample...


Business conditions that change rapidly and social extremes that exist don’t add to country’s attractiveness.
Corruption is still a big issue in Brazil. Opening an operation in Brazil may require additional payments to government officials, which can present a big obstacle to entering a market. According to Transparency International, Brazil holds 70th place in level of corruption among 180 countries, higher then such economies as Cuba, Turkey and Bulgaria.

Economic environment
Due to large population and inflow of FDI, Brazil has extremely high potential for growth. The gap between rich and poor is decreasing gradually, and there is a significant trend of growing middle class. Good news is that Central bank has inflation under control and the risk of domestic currency devaluation is low. Brazil's currency, the real, was introduced in 1994, and is largely seen as a success. Currently, it is considered to be overvalued against the dollar, which hurts exports and helps imports.
Government is clear when it states that it has equal treatment for both foreign and domestic enterprises. There is abundance of unskilled and semi skilled workers, but labour costs on the global level are quite low. When it comes to import duties, there is a system in place which gradually reduces the tariff according to the number of years of successfully importing. Federal government doesn’t offer any help, but local state governments have a right to offer incentives for investing, almost the same set of incentives as it does to domestic enterprises. Corporate tax is 15% and there are no clear incentives for leaving the profit in the country. The tax rate is quite high compared to some economies like Ireland, Portugal or Greece. PriceWaterCoopers, consultant agency, highly recommends that exporters seek assistance from local trade and tax consultants before shipping any goods.

Social environment
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