Economic analysis


Population 208.5 million
GDP per capita 8,959 US$
Country risk assessment
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major macro economic indicators

  2017 2018 2019 (e) 2020 (f)
GDP growth (%) 1.1 1.1 0.9 -6.5
Inflation (yearly average, %) 3.5 3.7 3.8 3.5
Budget balance (% GDP) -7.8 -7.1 -6.1 -5.5
Current account balance (% GDP) -0.7 -2.2 -3.2 -3.3
Public debt (% GDP) 74.1 77.2 78.9 79.8


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


  • Varied mineral resources and agricultural harvests
  • Large population (estimated at 210 million)
  • Well-diversified industry
  • Strong foreign exchange reserves (import coverage of roughly 25 months)
  • Net creditor in foreign currency


  • Sensitive fiscal position
  • Infrastructure bottlenecks
  • Low level of investment (roughly 16% of GDP)
  • Relatively closed to foreign trade (exports represents only 13% of GDP)
  • High cost of production (wages, energy, logistics, credit) harming competitiveness
  • Shortage of qualified labour; inadequate education system

Risk assessment

Economic momentum should marginally improve

Activity registered another year of weak growth in 2019, when it was mainly led by household consumption and private investments (albeit still at low levels). Meanwhile government expenditure remained limited by tight fiscal budget and exports felt the headwinds coming from decelerating global activity (notably the recession in Argentina). This year GDP should register a relatively stronger economic momentum. Consumption should be favoured by some improvement on the job market, low inflation and by the current expansionary monetary policy (interest rate stands at historical minimum). Meanwhile, private investment is likely to benefit from relatively higher business confidence (following the approval of the social security reform and the expected progress in pro-business reforms) and the lower lending rate. Contrarily, exports should remain at weak levels, as the recession in Argentina is not likely to ease this year and global GDP should continue to decelerate. Finally, mining activity should report some rebound in production, following the normalization of iron ore production, which has been affected by the Brumadinho dam accident in January 2019. The main risks to the economic scenario are related with a possible stronger than anticipated global economic deceleration and a strong escalation of political polarization in the country (as it has been seen recently in other neighbouring economies).


Sound external position continues to diverge from fiscal outcome

Current account deficit widened in 2019, mainly driven by a lower trade balance surplus as the general slowdown in global activity took its toll on exports. Meanwhile, the deficit in services (1.9% of GDP) and the primary income imbalance of around 2.7% of GDP remained wide (mainly due to high profits and dividends remittances). In 2020, the current account deficit is expected to further widen, given the decelerating global economy and considering the scenario where the Brazilian economy gains some traction (increasing imports). Despite that, the strong foreign direct investment inflow (of roughly of 4% of GDP) and foreign reserves position will assure an adequate external position. Finally, the country remains a net creditor in foreign currency, with total external debt at roughly 18% of GDP (24% of the total debt is owed by the public sector and 38% by each non-financial and financial sectors).

The fiscal deficit marginally improved in 2019, driven by lower interest payment (because of the decline in policy rate Selic – three quarters of Brazilian debt is indexed to it) and the state owned development bank BNDES reimbursements to the Treasury. Moreover, in October 2019 the congress approved the much needed and long awaited social security reform, which is expected to save BRL 738 billion over ten years (roughly USD 180 billion or 10% of the 2019 GDP estimated value). However, this amount does not include savings of subnational entities, which are still under discussion in the Congress (their total adherence could add estimated BRL 350 billion to the 10-year savings). Finally yet importantly, the government expects to spare an extra BRL 240 billion in the same period thanks to the combat of fraud in social security benefits. Despite the relatively brighter outlook for public balance, the gains are more in the long term. In the short term, as will be the case of this year, the fiscal imbalance will remain high. In order to smoothen the high rigidity of public expenditure (at present, about 95% of public spending is compulsory), policymakers were sent to Congress in November 2019 to propose economic reforms, which aim, among other things, to decentralize the public budget and increase its flexibility.


A first year in office marked by controversies

The far-right President Jair Bolsonaro has completed one year in office in early January 2020, after a year marked by controversies, even with members of his own party (prompting to his exit of the Social Liberal party in late 2019). Although his government was able to get the much-needed social security reform approved, it was more the outcome of a broad political consensus on the matter, than a merit of the ruling government alone. With the latter reform now approved, policymakers will focus on passing other important measures (such as reforming taxes, granting official independence to the central bank and selling public assets). That said, to move forward with the pro-business agenda, the executive will need to assure a cohesive political base (a point to be monitored, given the recurrent needless political noise between the executive and legislative powers). Indeed political risk has recently escalated, which could jeopardize the progress of the executive agenda in the legislative. This deterioration was triggered by the release from prison of the former President Luiz Inácio Lula da Silva (2003/2010) from the left-wing Labour party (PT) in early November 2019 (after 18 months in jail for money laundering and corruption). His release followed the Supreme Court vote that a person can be imprisoned only after all appeals to higher courts have been exhausted. Since this episode, political polarization has gained further momentum.


Last update: May 2020



Bills of exchange (letra de câmbio) and, to a lesser extent, promissory notes (nota promissória) are the most common form of credit note used in local commercial transactions. The validity of either instrument requires a certain degree of formalism in their issuance. The most commonly payment method used in Brasil is “Boleto bancário” which is an official Brazilian payment method regulated by the Central Bank of Brazil. It is a push payment system, which was launched in 1993 and today generates 3.7 billion transactions per year.  The payment process for “Boleto bancário” transactions is similar to that of wire transfer or cash payment methods. Customers are provided with a prefilled boleto bancário payment slip. At this point, the customer has the option of printing the form and paying it physically at any bank branch or at authorized processors such as drugstores, supermarkets, lottery agencies and post offices. Additionally, it can also be paid electronically at any of the more than 48,000 ATMs in Brazil, as well as through internet banking or mobile banking apps, which are widely used in the country. 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.