Economic situation A country in crisis, with considerable potential
Between 2017 and 2019, the economy recovered slightly. In 2020, the impacts of the COVID-19 pandemic made themselves felt – GDP fell by 4.1 per cent. However, by borrowing so as to provide financial assistance to help businesses and people who lost their jobs because of the pandemic, the Brazilian government has done a better job of limiting the economic slump than many other countries in the region.
Two major concerns are the low competitiveness of local industry and Brazil’s budget deficit, which has risen massively during the COVID-19 pandemic. Foreign direct investment has seen a 45 to 50 per cent drop in the past two years.
Brazil’s long-term economic potential is huge. The country is rich in natural resources and has a large, well-trained workforce. Its agricultural production makes an important contribution towards world food security. Brazil is one of the world’s biggest producers of coffee, sugar, meat and soya products. It should in particular be noted that there are over one thousand very active German or German-Brazilian businesses operating in the country.