Economic studies


Population 211.8 million
GDP per capita 6,823 US$
Country risk assessment
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major macro economic indicators

  2019 2020 2021 (e) 2022 (f)
GDP growth (%) 1.2 -3.9 4.7 0.0
Inflation (yearly average, %) 3.7 3.2 8.3 7.2
Budget balance (% GDP) -5.8 -13.6 -5.2 -9.4
Current account balance (% GDP) -3.5 -1.7 1.3 -1.4
Public debt (% GDP) 74.3 88.8 82.0 86.0

(e): Estimate (f): Forecast


  • Varied mineral resources and agricultural harvests
  • Large population (estimated at 211.9 million)
  • Well-diversified industry
  • Strong foreign exchange reserves
  • Net creditor in foreign currency


  • Sensitive fiscal position
  • Infrastructure bottlenecks
  • Low level of investment (roughly 19% of GDP)
  • High costs of production (wages, energy, logistics, credit) that harm competitiveness
  • Shortage of qualified labour, inadequate education system
  • Criticized environmental policy (permissive with deforestation)

Risk assessment

Economy to strongly decelerate in 2022

In 2022, the economy is set to decelerate substantially, mostly driven by base effects and the lagged impact of aggressive monetary policy tightening. Moreover, the combination of a still high unemployment rate, price pressures and tighter credit conditions will cause negative spill-over effects on household consumption (61% of GDP), limiting it to mild growth in 2022 (despite the new welfare program Auxílio Brasil). In addition, gross fixed investments are expected to slightly contract, following their strong showing last year and as political uncertainty increases with the proximity of presidential elections. Furthermore, net exports should have a marginal positive contribution. Still supportive commodity prices (accounting for 60% of foreign sales), will allow exports to grow, but at a more moderate rate, as the global economy loses some traction. Still, agriculture exports could be affected by the La Niña, which has brought notably dryness to the south of the country, putting a downward bias on the 2021/2022 grain crop.  Finally, lower domestic demand will also curb imports’ expansion from the highs seen in 2021. 


 A benign current account deficit; laxer fiscal policy

The current account deficit widened in 2021 in value terms, albeit it shrank as a percentage of GDP (higher denominator). The primary income deficit led the deterioration in the period, as repatriated foreign investment income rose strongly. This prevailed over the services deficit reduction (lower international travel and equipment rental) and the higher trade balance surplus. In fact, both exports and imports strongly expanded in the period. While higher agriculture and mineral commodity prices boosted foreign sales, imports advanced as well amid the economic rebound and higher fuel prices. Still, the drought also drove an increase in the purchase of natural gas and electricity from neighbours. On the financing side, foreign direct investment improved from 2020, as the economy reopened, and was able to cover comfortably the external shortfall. In 2022, it should continue to expand (albeit still below 2019 levels), driven by supportive commodity prices and the depreciation of the Brazilian Real (increasing the attractiveness of local assets to foreign investors). Additionally, portfolio investments should remain robust, notably driven by fixed income securities, as Brazil has implemented one of the world´s most hawkish monetary policy. Meanwhile, foreign currency reserves remain robust, ensuring an import coverage of 25 months as of October 2021. Finally, total gross external debt (including intercompany loans and domestic fixed income securities held by non-residents) stood at 39% of GDP in Q3 2021, with the general government and central bank share at 6% of GDP. In 2022, the current account deficit should remain quite similar.


On the fiscal front, the budgetary deficit narrowed markedly in 2021, thanks to rebounding corporate tax revenues, higher dividends from state-owned enterprises and relatively lower fiscal stimulus. Gross public debt reduced driven by higher nominal activity (boosted by inflation). Nonetheless, the budgetary imbalance is set to deteriorate in 2022, amid a rise in public expenditure and a marked increase in debt interest payment (in line with the ongoing sharp retightening of policy rate Selic). A constitutional amendment approved by Congress in December 2021 limited the annual settlement of judicial claims by the central government and modified the indexation of the federal expenditure ceiling. This will allow the government to spend an additional USD 20.8 billion this year (1.2% of the 2022 projected GDP).


Political climate will remain tense as general elections approach

Brazil will hold presidential elections on 2 October 2022, with the new term set to start on 1st January 2023. The incumbent president Jair Bolsonaro from the right-wing Liberal party has signalled his intention to run for re-election. However, preliminary polls have indicated that this will not be an easy task. According to them, the former leftist president Luiz Inácio Lula da Silva (2003-2010) from the Labour party, and a probable candidate, is well placed for the race. Aware of this tough outlook, the ruling government has launched a new welfare program, called Auxílio Brazil, to replace the Bolsa Família. The new program will increase the value and extend it to more beneficiaries. During the October 2022 vote, the country will also renew all State Governors, one-third of the 81 members of the Senate and all 513 members of the Lower House. Overall, the extensive political calendar this year will undermine the chances of passing important reforms in Congress, as politicians switch their focus to the voting. As such, bills currently under discussion in the legislative that could improve fiscal sustainability and curb the cost of doing business (such as the administrative and tax reforms) may not be approved in 2022. 


Last updated: February 2022



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.