Brazil is a very attractive emerging market for many of our clients. It is the second largest economy in the Western hemisphere – the largest in Latin America. The country has one of the fastest-growing economies in the world, and is home to many promising businesses. Our coverage – using our unique Total Analysis model – ensures that our clients make well-informed investment decisions in Brazil. Our teams keep them informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. We also provide in-depth analysis on 24 of Brazil's most important industries. Our winning combination of interactive data and forecasting, alongside our risk-assessed and results-proven analysis, will make sure that you, as one of our clients, are always ahead of the game in Brazil.

Country Risk

Brazil Country Risk

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Core Views

  • Widespread public unrest, sweeping corruption scandals, and deepening polarisation will keep political risk elevated over the coming quarters, weighing on investor sentiment and contributing to extreme uncertainty in terms of policy direction. Over a multiyear timeframe, the Brazilian electorate will demand progress on promised reforms, including higher-quality public services and greater government transparency.

  • Over the long-term, Brazil will only experience modest levels of growth as structural headwinds limit any quick economic solutions to the challenges faced from falling global commodity prices. Modest growth will only return to the economy following two consecutive years in recession in both 2015 and 2016.

Major Forecast Changes

  • We have downgraded our 2016 real GDP...

Brazil Operational Risk Coverage (9)

Brazil Operational Risk

BMI View:

BMI View: As one of the largest economies in the world, with considerable opportunities for development in key sectors, Brazil holds huge appeal to foreign investors. However, the country's economic potential continues to be constrained by a difficult operating environment, characterised by complex regulatory and legal systems, high levels of government intervention in the economy, an inadequate logistics network, and exorbitant labour costs. In addition, investor sentiment is dented by the poor rule of law, with criminal gangs remaining prevalent in many areas and corruption scandals frequently rocking the establishment. Brazil's huge investment potential means that many companies are willing to overcome these substantial obstacles, but structural economic and legal reforms will be necessary before the country is able to offer a stable, welcoming and open operating environment. Consequently, Brazil is...

Brazil Crime & Security

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BMI View: The most significant security risk facing foreign workers and businesses in Brazil is its high crime rate, particularly with regard to violent crime and cyberattacks. Indeed, while the rates of theft, assault and homicide have remained steady in the last few years, they still remain among the highest in Latin America. Powerful criminal organisations conduct activities in all regions, including affluent areas, although the urban centres of Rio de Janeiro and Sao Paulo are a major focus of security forces' efforts and have seen some reduction in criminal activity. The transition of criminal gangs into the digital sphere is also becoming one of the country's most pertinent security risks. In contrast, the threat of terrorism or interstate conflict disrupting business activity in Brazil is negligible, due to the lack of domestic insurgent groups, limited...

Brazil Labour Market

BMI View:

BMI View: Brazil offers incoming businesses a sizeable and diversified labour pool with a rising number of university graduates from technical or science programmes, relatively high female participation rate and large urban population. However, hiring Brazilian workers entails significant costs, even for low-skilled positions, due to mandatory minimum wages and labour taxes, while demand for highly skilled staff further pushes up the cost of employment. Other major drawbacks include inflexible labour laws with strict legal protection for workers, powerful and active unions, and increasing social unrest. Businesses therefore have limited flexibility with regard to setting wages and hiring and firing practices, and face a high risk of strikes and demonstrations disrupting production. Overall, Brazil has a Labour Market risk score of 47.7 out of 100, placing it in 32nd place among 42 countries in the...

Brazil Logistics

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BMI View: Brazil's economic growth remains constrained by the lack of development in its transport and utilities infrastructure, increasing operational risks and adding costs to supply chains. The utilities sector offers competitive prices, but soaring demand means it is overstretched, and droughts have led to frequent water and power shortages, compromising business activities in Brazil's main economic sectors, agriculture and mining. In addition, trade flows are reliant on a poor quality and congested road network, which is not able to meet supply chain needs, increasing the risk of delays. Although investment across utilities and transport infrastructure is underway, the burden placed by economic and population growth will ensure that the risk of disruption to...

Brazil Trade & Investment

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BMI View: Brazil offers numerous opportunities for foreign investors, with abundant natural resources and a growing middle class consumer base among the main attractions of the country's vibrant economy. However, significant bureaucracy, government intervention in the form of onerous taxes, lingering corruption issues, and an overburdened judiciary present obstacles to businesses operating in the country. In particular, the huge corruption scandal engulfing state-owned oil company Petrobras has plunged the economy into recession and heightened investor caution towards Brazil over the short term. Brazil therefore ranks 20th out of 42 Latin American states in the overall BMI...

Brazil Industry Coverage (30)


Brazil Agribusiness

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BMI View: We believe that grains production growth over the next five years will slow relative to the preceding five. Soybean production will outpace that of corn, as lower production costs for soybean relative to corn will make the commodity more attractive to grow. However, we see limited growth out to 2019/20 given the scarcity of area available for expansion, as well as high import costs for fertilisers. We hold a more positive view on the sugar industry now than we have held in the past, due to reforms in the ethanol sector and the significant depreciation in the real over the past several months. Real weakness will be a net positive for the country's agricultural sector.



Brazil Autos

BMI View:

BMI View: Brazil's new vehicle market will return to growth in 2016 but will remain at historically low volumes. Upward pricing pressures, tightening lines of credit, consumer and business deleveraging and general economic stagnation will continue to drag on market performance.

Passenger Car and Light Commercial Vehicle Sales
f = BMI forecast. Source: National Association of Motor Vehicle Manufacturers (Anfavea), BMI
Key Views:

Commercial Banking

Brazil Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Consumer Electronics

Brazil Consumer Electronics

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BMI View: We maintain our negative outlook for the Brazilian consumer electronics segment in 2016 as we forecast this to be the final year of market contraction before returning to growth trajectory from 2017 onwards. Brazilian consumer electronics spending declined sharply in 2015 due to recession and depreciation, with a double-digit decline even in local currency terms. Spending is forecast to contract again in 2016 as recession and further depreciation erode purchasing power, but conditions are expected to be slightly less hostile than in 2015. Under our core scenario, the market is however forecast to return to growth from 2017, as wider economic sentiment improves with an added boost from currency appreciation, which we believe will unlock deferred...

Defence & Security

Brazil Defence & Security

BMI View:

BMI View: We expect Brazilian defence expenditure to contract in 2016 amid the recession; however, it will remain at around 1.3% of GDP, and return to growth over the medium term as economic conditions improve. Defence spending will be driven by factors such as the country's efforts to reduce crime levels, prevent illegal activities in the Amazon, and contribute to international peacekeeping missions. Brazil has the largest defence budget in the Latin America region, and is able to invest significantly into procurement of military equipment and defence R&D. This enables the domestic defence sector to continue to develop, increasing export potential, and gradually allowing it to capture a large share of the Brazilian MoD's procurement contracts. Over the long term, therefore, we expect defence exports to grow at a faster pace than imports.

Headline Defence Expenditure Forecasts (Brazil 2015-2020)...

Food & Drink

Brazil Food & Drink

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BMI View: Brazil's recession will deepen over 2016 leading to rising unemployment and a reduction in real wages, resulting in our weak outlook for consumption. Brazil's manufacturing sector for consumer goods cannot support domestic demand, making the country reliant on imports. As the currency continues to weaken, import costs will rise and spur food inflation. Premium categories will be the hardest hit as consumers cut down discretionary spending.

Food & Drink Spending
e/f = BMI...

Freight Transport

Brazil Freight Transport

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BMI View: We expect steady if lacklustre growth in Brazil's freight sector in the coming years, with tepid increases in mining and agricultural output ensuring demand remains elevated. We caution that a more robust expansion will be prevented by a slowdown in the consumer sector, weak global commodities and a lacklustre external picture. As a result, we expect the road and rail sector will display the largest gains.

Brazil's economy will remain in recession in 2016 after dipping below zero in 2015, for the first time in seven years. We forecast real GDP to contract by -0.8% in 2016 following a contraction of -2.7% in 2015. Major headwinds to private consumption and a fixed investment via a slow resolution of the corruption scandal at national oil company Petrobras will be the primary driver of the slowdown, with unemployment...

Information Technology

Brazil Information Technology

BMI View:

BMI View: The Brazilian IT market was severely impacted by US dollar appreciation in 2015, but the decline in the Brazilian market specifically was severe due to the negative impact of the commodity downturn and domestic economic and political uncertainties. We estimate that the IT market contracted sharply by about 16% in 2015 - and with recession forecast to extend into 2016, we expect that the IT market will contract again in 2016 but at a much slower rate. Our forecast envisions the negative shocks to ease by 2017 when the IT market begins to return to growth trajectory as the economy recovers and the real appreciates. We forecast total IT market spending reaching BRL117.4bn by 2020. We continue to highlight opportunities in the enterprise market for cost efficiencies and...


Brazil Infrastructure

BMI View:

BMI View: Brazil's construction sector remains in a state of flux, with the recession expected to persist in 2016 as tenders are delayed, companies face a high cost of capital, the public sector remains in gridlock. The recession will ease as the government filters funding into the sector through state banks, however, a longer term recovery is unlikely without necessary reforms.

Latest Updates And Structural Trends

  • We are broadly maintaining our outlook for Brazil's construction sector after 2015 real growth came in line with our estimate, at -7.6%. We maintain our expectation for the recession to persist in 2016, albeit easing to -2.7%, with a deeper recession expected in the broader economy and ongoing implications from the Lava Jato corruption scandal directly impacting the construction sector and creating significant...


Brazil Insurance

BMI View:

BMI View : In spite of a very difficult economic environment, Brazil remains a market that is both large in absolute terms and, in relation to the forecast period, reasonably quickly growing. We continue to forecast solid high mid-single digit annual growth in premiums in both of the two main segments. Health insurance will drive the expansion of the non-life segment. In the life segment, additional sales to existing clients will be the main catalyst for growth.


Headline Insurance Forecasts (Brazil 2013-2020)
2013 2014 ...

Medical Devices

Brazil Medical Devices

BMI View:

BMI Industry View: The relatively low density of the medical device market means Brazil will continue to offer considerable potential for expansion, despite a contracting economy and a depreciating real, which is making imported products more expensive. We forecast that the import share, which is already lower than in other parts of Latin America, will fall still further over the longer term given the current drive to expand domestic production into new product areas through technology transfers. The recent decision to grant tax breaks to domestically-produced devices will provide an...


Brazil Metals

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BMI View: Tin prices will be capped by US dollar strength in 2016, leading us to trim our price forecast to USD14,500/tonne. Beyond 2016, prices will recover gradually as the global tin market posts sustained market deficits and inventories dwindle.

Global - Tin Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

Brazil Metals

BMI View:

BMI view: We have revised our aluminium price forecast from USD1,575/tonne to USD1,600/tonne in 2016, as the tightening market provided an earlier than expected floor in Q116. Aluminium prices will gradually edge higher as the global market moves into a deficit by 2018.

Global - Aluminium Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f

Brazil Metals

BMI View:

BMI View: Nickel prices will bottom in 2016 as weak production drags the global market into deficit. For instance, we expect Chinese imports of nickel to grow over the coming quarters. Prices will begin 2016 weaker than we had previously expected and we have thus revised down our 2016 average price forecast to USD9,000/tonne from USD10,500/tonne.

Global Nickel Forecasts
2013 2014 2015e

Brazil Metals

BMI View:

BMI View: We have revised down our average copper price forecast for 2016 to USD4,900/tonne. We expect prices to find a floor over the first half of 2016, and begin to stabilise thereafter, supported by production cuts and modest consumption growth.

Global - Copper Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f ...

Brazil Metals

BMI View:

BMI View: Gold prices will prove resilient in 2016 due to a dovish shift in global monetary policy and elevated systemic financial sector risks. However, we do not foresee a sustained multi-year recovery and the mining sector will thus remain under significant stress. We forecast slowing mine production growth and increasing consolidation.

BMI Gold Forecasts
2014 2015 2016f 2017f ...

Brazil Metals

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BMI View: Global steel prices will remain subdued due to a persistent steel oversupply over the coming quarters. From 2017 onwards, steel prices will gradually edge higher as the global steel surplus will narrow due to Chinese supply moderation.

Steel Price Forecast
2014 2015 2016f 2017f 2018f 2019f...

Brazil Metals

BMI View:

BMI View: We maintain our average zinc price forecast for 2016 of USD1,750/tonne. We expect zinc prices to reach a floor over the first half of 2016, and begin to stabilise thereafter, as production cuts shift the market to a deficit.

Global - Zinc Supply, Demand & Price Forecasts
2014 2015e 2016f 2017f 2018f

Brazil Metals

BMI View:

BMI View: Lead prices will gradually edge higher as the global lead market will shift into deficit by 2017 as production growth will slow over the coming years.

BMI Lead Price Forecast
Current* 2016f 2017f 2018f 2019f 2020f


Brazil Mining

BMI View:

BMI View: Brazil's mining industry will be supported by solid production growth in the country's iron ore sector over the next few years. Despite this, gold, nickel and tin production growth will slow due to continued price weakness.

Brazil Mining Industry Value Forecast (2014-2020)
2014e 2015e 2016f ...

Oil & Gas

Brazil Oil & Gas

BMI View:

BMI View: Brazil's vast pre-salt reserves suggest substantial growth potential over the long term, underpinning our bullish upstream view that crude, natural gas, and other liquids output will rise throughout our forecast period. However, production growth will be limited by lower oil prices and decreased capex funds. As such, we maintain a relatively modest outlook, reflecting our view that the above-ground environment remains a considerable obstacle to the upstream and downstream segments due to weakening project economics, waning investor confidence, and a burdensome regulatory environment.

Headline Forecasts (Brazil 2013-2019)


Brazil Petrochemicals

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BMI View: The Brazilian petrochemicals industry will only just offset the expected contraction in the domestic market with export growth, supported by lower naphtha feedstock prices and a weak currency. While export growth helped limit the effects of a deteriorating domestic market in 2015, there is uncertainty over the strength of any long-term recovery.

The industry's domestic petrochemicals sales shrank 5.4% in 2015 with national demand for chemical products for industrial use falling 6.8%, according to the Brazilian Chemical Industry Association (Abiquim). The deceleration of domestic activity and the real devaluation affected the volume of imports, which fell 21.6%. This enabled local producers to raise their domestic market share by 5.4 percentage points even as the market shrank.

Year on year, Brazilian demand for resins (PE, PP and PVC) was approximately 4...

Pharmaceuticals & Healthcare

Brazil Pharmaceuticals & Healthcare

BMI View:

BMI View: The current state of political uncertainty will not shake Brazil's leading position as Latin America's largest pharmaceutical and healthcare market. The Brazilian government has been committed to improving the population's access to healthcare for decades. Having said this, Brazil's private healthcare market will experience contraction in real terms in 2016 due to the deteriorating political and economic outlook.

Headline Expenditure Projections

Pharmaceuticals: BRL66.8bn (USD20.0bn) in 2015 to BRL71.7bn (USD17.9bn) in 2016; +7.4% in local currency terms and -10.6% in US dollar terms. Forecast in local currency...


Brazil Power

BMI View:

BMI View: The Brazilian electricity market will offer several business opportunities to project developers and power sector investors over the coming quarters, despite a worsening of the country's economic recession in 2016. The renewables and hydropower sectors will present the biggest upside to international investors in terms of scale, but we see opportunities also in power transmission and distribution. That said, we maintain that high interest rates and continued currency weakness, coupled...

Real Estate

Brazil Real Estate

BMI View:

BMI View: A redressing of the balance between supply and demand is characterising the real estate markets in Brazil in 2016, as large amounts of developments completed over the past years have resulted in over-supply. Therefore despite respectable demand, we do not see rental rates increasing over the coming year. We forecast transactional activity to pick up in 2017, off the back of the Olympic Year, which should see the nation's profile raise in time for new economic reform policy to be implemented, making Brazil a more attractive place in which to both invest and operate from.

With the economy headed towards recession, Brazil's property markets are under considerable pressure. We expect a rebound in the economy and the real estate sector to take hold from 2017 onwards. When the...


Brazil Renewables

BMI View:

BMI View : As the wider economic downturn worsens, we expect growth in non-hydro renewables to decrease below previously forecast levels for 2015 and 2016. Although auctions in H215 showed stable interest, increasing obstacles such as high interest rates and a weakened currency have led us to further revise our already conservative overall estimates. Solar power has, nevertheless, experienced another upward revision for our long-run outlook; we now expect the sector to cross the 1GW capacity mark in 2017 - instead of...


Brazil Retail

BMI View:

BMI View: A weakening labour market, elevated inflation and tightening credit conditions will to continue weigh on Brazilian retail sales over 2016, with the non-essentials segment suffering in particular. That said, the country remains the largest market in Latin America and we expect a more pronounced recovery in consumer sentiment from 2017 onwards.

Brazil's economy is poised to deteriorate even further in the coming months on the back of additional job losses and elevated inflation in 2016. Labour market rigidity had long precluded rises in unemployment; even as the economy began to weaken in 2014, unemployment remained below 5.0%. Since then, we have seen a considerable deterioration, with unemployment rising to nearly 8.0% as of October 2015. Moreover, the public sector has...


Brazil Telecommunications

BMI View:

BMI View: The principal trend in 2016 will be one of consolidation involving mobile and wireline sectors. The biggest deal would be the sale or break-up of TIM Brasil, with leading players Vivo and Oi the likely winners. These companies would obtain significant market power through such a deal and close regulatory scrutiny should be expected; this may benefit some of the smallest players, particularly if assets such as spectrum and towers are sold off.



Brazil Tourism

BMI View:

BMI View: The next quarter will be a key one for Brazil's tourism market, which will expect the bulk of arrivals and receipts to be centred around the Rio Olympic Games in August. However, after this event we forecast a period of stagnation for the industry, with a post-event lull combining with domestic economic weakness to lower demand and investment.

Key Forecasts (Brazil 2013-2020)
Indicator 2013e 2014e 2015e ...


Brazil Water

BMI View:

BMI View: We have extensively updated and expanded our Brazil water forecasts, including those for non-mains, and agricultural consumption, water losses and wastewater treatment methods. Overall, we believe that the pressures stemming from the ongoing drought, in conjunction with rising industrial and agricultural water demand, will stimulate heavy investment into water reuse, wastewater treatment facilities and the expansion and improvement of the distribution and collection networks.

Irrigation water areas are rising, albeit gradually, from 4.5mn hectares in 2006, to 5.4mn hectares in 2008, and 5.8mn hectares in 2012. We now forecast agricultural water consumption to see steady growth over the coming years...

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