UK-Brazil Trade: Brazil's Economy Overview

As LATAM's largest economy (accounting for roughly a third of the region’s GDP), Brazil serves as a strategic anchor within global trade & supply chain corridors.

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Its economy is underpinned by a large physical industry, and boasts a net exporter status driven by its agriculture, energy and manufacturing sectors. Here's a further breakdown of Brazil's economy.

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Executive Summary

Brazil stands as Latin America’s diversified industrial and export powerhouse, representing a third of the region’s total economic output with a £1.5 trillion real GDP. The country’s economy is underpinned by large physical industries and maintains a net exporter status driven by agriculture, energy, and manufacturing sectors, which collectively account for 32% of gross value added. Brazil offers access to significant scale through its 212 million population with a rising middle class and digital-native base, while its services-led economy contributes 59% of GVA through strong financial services, retail, and telecommunications sectors. Capital markets provide reasonable liquidity with £800 billion equity market capitalisation on the B3 exchange, over 83 companies with £100 million-plus revenues, and 60 public companies with billion-dollar market capitalisations. Brazil is Latin America’s most active private equity market, it attracts 40% of the region’s FDI (£57 billion in 2024), and has a vast consumer spending base of £1.2 trillion.

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Market Fundamentals

Brazil operates as one of Latin America’s largest economies, contributing a third of the region’s total economic output with a £1.5 trillion real GDP, comparable in scale to major developed markets. The country’s output base is anchored by substantial physical industries representing 32% of gross value added, with agriculture, energy, and manufacturing sectors driving its net exporter status. Capital markets demonstrate meaningful depth through the B3 exchange’s £800 billion equity market capitalisation, supported by over 83 companies generating £100 million-plus revenues and 60 public companies maintaining billion-plus market capitalisations. Brazil’s export orientation across agriculture, energy, and manufacturing provides sustained foreign exchange receipts. The domestic market is robust, with an estimated 212 million consumers (of which 87% have internet access and 84% have banking access) spending £1.2 trillion. The economy benefits from sector diversification between a services-led structure (59% of GVA) encompassing financial services, retail, and telecommunications, alongside substantial physical industries, creating natural shock absorbers against cyclical volatility and a strong employment base for low, mid and high-skilled workers.

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Trade Activities

Brazil remains a structural net exporter led by mineral fuels (US$57.16B), oilseeds (US$43.83B), ores (US$35.04B), meat (US$24.55B) and sugars (US$18.84B) in 2024. Imports concentrate on capital goods - particularly machinery. China is Brazil's principal trading partner, with bilateral trade around US$160 billion in 2024, while the United States and Argentina rank next. Resource- and industry-focused FDI stays strong, with Brazil attracting 40% of regional inflows (£57 billion in 2024), indicating a strong investor appetite in Brazil's key export-driven physical industries.

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Infrastructure Development Drivers

‍Industrial policy channels projects via the Federal Investment Partnership Programme, launched by the Ministry of Infrastructure in April 2024. Energy expansion spans hydrocarbons and a rapidly greening matrix: renewables provided 88% of electricity in 2024, with wind-solar supplying nearly one-quarter of demand. Logistics upgrades focus on export corridors - the planned 933km Ferrogrão railway will link Mato Grosso grain fields to Miritituba port, projected to halve freight costs and ease BR-163 congestion. Complementary highway concessions, such as the Raposo Tavares corridor, duplicate key stretches to channel agribusiness flows towards São Paulo terminals. Manufacturers leverage blended capital - £57 billion FDI in 2024 and an active PPP pipeline - to modernise plants and integrate supply chains. High digital penetration accelerates service-sector productivity, reinforcing export readiness along newly connected interior-to-port routes.

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Growth Catalysts & Challenges

‍Brazil’s £1.5 trillion economy expanded by an estimated 3.4% in 2024 while adding 2.8 million jobs; unemployment fell to 6.2% and inflation averaged 4.8%. Scale fuels demand across 212 million consumers and deep supply chains. Agriculture, energy and manufacturing remain core flywheels, generating 32% of GVA and sustaining chronic trade surpluses that recycle into fresh capital formation. A robust services layer - finance, telecoms, logistics - amplifies industry, supported by near-universal digital connectivity and £1.2 trillion in consumer spending. Yet headwinds endure. Commodity cycles and currency swings threaten fiscal buffers. Export logistics remain costly, with maritime freight rates having increased by up to 400% over six months in 2024, impacting port operations and supply chains. Competitiveness is hindered by a 109,000-person annual shortfall in tech talent and lingering regulatory drag from a 127th ease-of-doing-business rank. Execution risks around corruption and policy shifts remain, but strategic investment where logistics upgrades intersect with high-value export clusters offers compelling upside.

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