The world's seventh wealthiest economy (2010 GDP - US$ 2.1 trillion), Brazil is the largest country in area and population in Latin America and the Caribbean.

Although it has had a history of economic boom and bust and its development has been hampered by high inflation and excessive indebtedness, reforms in the 1990s and ongoing sound macroeconomic and social policies have resulted in an extended period of stability, growth and social gains.

Following the outbreak of the global economic crisis in September 2008, Brazil underwent a recession that lasted only two quarters; aided by very strong fundamentals, a counter-cyclical macroeconomic policy stance and increasing commodity prices, the economy recovered at a fast pace. The country is adapting to the 2011 global downturn with a program of fiscal tightening, and growth is expected return to pre-crisis levels in 2012.

Brazil has immense natural resources and a strong industrial development potential, but still suffers from a wide gap between rich and poor. Innovative social programs and a more inclusive growth in recent years are gradually decreasing this inequality.

Growth and stabilization

In 2011, Dilma Rousseff of the Workers Party became the first female president in the history of the country. Ms. Rousseff was elected on a platform of continuity of the economic and social achievements of her predecessor President Luiz Inácio Lula da Silva. Ms. Rousseff vowed to eradicate extreme poverty and keep the country in a sustainable development path. One of the most pressing concerns of her Government is to foster the country's economic growth while keeping inflation under control, and to boost competitiveness in a strong currency context.

In June 2011 President Rousseff launched her government’s flagship social program, Brasil sem Miséria, which aims to reach 16 million people and eradicate extreme poverty.

Brazil has assumed a higher international profile, with leading roles in areas such as climate change, south-south cooperation, agriculture technology, trade, biofuels, AIDS, biodiversity and social technologies.

External links:
Presidency of Brazil

ECONOMY:

Brazil weathered the global financial downturn with relatively minor impacts. The country was one of the last to fall into recession in 2008 and among the first to resume growth in 2009. Brazil's GDP grew 7.5 percent in 2010 and is expected to grow approximately 4 percent in 2011, because of the new global slowdown. Still, Brazil’s strong domestic market is less vulnerable to external crisis, and Brazilians are benefiting from stable economic growth, relatively low inflation rates and improvements in social well-being.

Despite the important advances in microeconomic and institutional reforms, non-inflationary potential growth is still limited by various barriers and regulations, as well as inadequate infrastructure and a poor business climate.

The quality of government services in relation to expenditures also remains relatively low compared to other middle income countries.

Growth Plan

The Growth Acceleration Plan (PAC, in its acronym in Portuguese) was launched in 2007 to increase investment in infrastructure and provide tax incentives for faster and more robust economic growth. The program contributed to the country’s 7.5 percent growth in 2010 and its quick recovery from the crisis in 2009, when it had one of the smallest downturns among developed and emerging economies.

Growth has put in evidence important infrastructure challenges. The country will host the World Cup in 2014 and the Olympic Games in 2016, demanding massive investments in areas such as urban and social development and transport infrastructure.

Brazil experiences extreme regional differences, especially in social indicators such as health, infant mortality and nutrition. The richer South and Southeast regions enjoy much better indicators than the poorer North and Northeast.

Poverty (PPP US$ 2 per day) has fallen markedly, from 21.7 percent of the population in 2003 to 9.9 percent in 2009. Extreme poverty (PPP US$ 1.25 per day) also dropped dramatically, from 10 percent in 2004 to 4 percent in 2009. Between 2001 and 2009, the income growth rate of the poorest ten percent of the population was 7 percent per year, while that of the richest ten percent was 1.7 percent. This helped decrease income inequality (measured by the Gini index) to reach a 50-year low of 0.53 in 2010. Key drivers of this have been low inflation, consistent economic growth, well-focused social programs, and a policy of real increases for the minimum wage.

Despite these achievements, inequality remains at relatively high levels for a middle income country, and there is still a large gap in access to infant and secondary education. After having reached universal coverage in primary education, Brazil is now struggling to improve the quality and outcome of the system, especially at the basic and secondary levels.

There has been enormous progress in decreasing the deforestation of the rain forest and other sensitive biomes, but the country faces important development challenges in combining the benefits of agricultural growth, environmental protection and the sustainable development.

As one of the leading nations on climate negotiations, Brazil has committed voluntarily to reducing its greenhouse gas emissions (GHG) by between 36.1 percent and 38.9 percent until 2020.

WORLD BANK SUPPORT:

The Bank’s mission is to help Brazil secure long-term sustainable growth, providing development opportunities for its population. The Bank's US$ 7 billion 2008-2011 Country Partnership Strategy ensured that it acted in a catalytic and focused manner to support Brazil’s achievement of its own development goals. The Bank's new strategic partnership with Brazil is currently in preparation, and will involve a broad debate with Government's officials, academia and civil society representatives.

In September 2011, there were 59 active projects financed by the International Bank for Reconstruction and Development (IBRD) in activity in Brazil, for a total of US$ 9.6 billion in commitments. Another 21 Global Environmental Project, carbon finance, guarantees and recipient executed projects were also active, totaling US$ 334.65 million in grants and guarantees.

Some of the Bank-financed projects in execution include support for the highly effective Bolsa Família conditional cash transfer program that reaches 12.7 million families (or nearly 50 million people). The program is among the most effective social protection programs in the world, having helped raise approximately 20 million people out of poverty between 2003 and 2009 and well as significantly reducing income inequality.  

Some of the active projects include the Family Health Program, several Sustainable Rural Development Projects in the Northeast and many education, water and urban interventions. The Bank has also helped implement the internationally renowned AIDS projects and the Amazon Region Protected Areas Initiative, which helped contain deforestation in the Amazon.

In addition to directly supporting program in the country, the Bank also produces numerous important research reports, such as the Growing Old in an Older Brazil report and the Brazil Low Carbon Study, and uses its global network to ensure that other countries benefit from Brazil's knowledge in areas where the country is an acknowledged global leader, such as clean energy, fiscal management, tropical agricultural research, conditional cash transfers, AIDS prevention and community drive development.

A More Competitive Brazil: Stimulating Sustainable Growth

The Bank’s partnership with Brazil is based on IBRD support for sustained, broad-based growth, in parallel with backing from the International Finance Corporation (IFC) to the private sector.

The Bank’s support for increased competitiveness and investments focuses on more efficient infrastructure and regulation, strengthening the financial sector, achieving a modern innovation policy, and a more favorable environment for business development, especially for small and medium-size enterprises. Among the projects that promote Brazil's competitiveness are several growth-focused programs, state transport operations, and investments in power distribution in the poorer areas of the country.

The Bank has been very active helping states and municipalities put in place results-oriented management practices, based on sound fiscal management.  Some examples include the Rio de Janeiro Metropolitan Urban and Housing Development Project;  the Minas Gerais Partnership for Development Program; the Rio de Janeiro Municipality Fiscal Consolidation for Efficiency and Growth Program,  the Ceará Inclusive Growth Program and the Rio de Janeiro State Public Sector Modernization Program.

A More Equitable Brazil: Investing in People

The Bank’s support in the social sectors focuses on reaching the poorest and achieving higher levels of quality and efficiency in social services.

Support to social protection was expanded through technical and financial assistance to national programs such as Bolsa Família, which reduces poverty in the short term: by providing small monthly cash payments to more than 12.7 million families-and breaking the poverty transmission to the next generation through education and health conditionalities on the cash transfers.

Under the new Partnership Strategy, the Bank will support Brazil’s drive to eradicate extreme poverty, with a focus on the Northeastern region, the country’s poorest.

A More Sustainable Brazil: Managing Natural Assets for Better Quality of Life 

In few countries the ecosystem is as crucial to development and people's welfare as in Brazil. The country has one-third of the world’s tropical rain forests, the largest reservoir of fresh water (20 percent), and a savanna with the greatest biodiversity in the world, the Cerrado. A significant part of Brazil’s economy relies on the use of natural resources.

However, these resources depend on sustainable use for maximum social and economic benefits, and Brazil is increasingly suffering from extreme climate events, including floods and droughts, that especially jeopardize the livelihoods of the poor and make the country more vulnerable to natural disasters.

The World Bank’s support for a sustainable Brazil is directed at improving quality of life through better local services in urban and rural areas, and for efficient management of Brazil’s abundant but fragile natural assets.

Indicators show progress on protection and sustained development of the large biomes. Legal allocation of water rights has increased in many important hydrographical basins, facilitating greater sustainability in water use and resource management, however, sanitation and pollution control are still major challenges.

In recent years, Brazil has improved its housing and rural electricity programs, as well as its environmental legislation, and has undertaken several climate change initiatives, including a voluntary program to reduce emissions between 36.1 percent to 38.9 percent over projected 2020 levels.

The Bank responded to the call for more support to government's initiatives which coordinate environmental protection and sustainable development for populations in the Amazon, and developed a framework for engagement in development initiatives in this sensitive biome. The framework was extensively consulted with government, academia, private sector and national and international civil society.

Other programs in the Bank’s environment portfolio in the country include the US$ 24.3 million Second National Environmental Project which helps strengthen environmental capacity in key Brazilian institutions at the federal, state and municipal levels, and the GEF’s US$ 13 million Sustainable Cerrado Initiative, a two grant (grant 1 / grant 2) program that aims to help protect Brazil’s biodiversity in the Cerrado savannah.

See: All Projects 

Brazil’s project portfolio spans across several areas of the economy, civil society and the environment, and has had significant positive impacts in the lives of people, including, especially, those amongst the most vulnerable.

The Bolsa Família Program has technical and financial support from the World Bank and is considered one of the main reasons behind the significant social results achieved by Brazil in the last years.

The program reaches over 12.7 million families - more than 50 million people - a large part of the country’s low income population, and served an important role in shielding the poorest from the 2009 global economic slowdown.

In keeping with its commitment to help improve the quality of life of the rural poor, the World Bank supports the Ceará Integrated Water Resource Management Project, which helped complete a canal of over 200 kilometers in Fortaleza, thus ensuring water provision for over 2 million people for 30 years in one of Brazil’s most arid regions.

In the future, the canal will be extended to a nearby port and industrial district, helping create jobs and boosting the state’s growth.

Health and Education

On the health front, several initiatives have made a difference in providing health care access to the neediest, including the Second Family Health Extension Program, which provides medical attention to vulnerable groups that do not have easy access to the hospital system. Vaccination coverage and child nutrition has also improved under the program.

Additionally, with World Bank help, Brazil developed one of the most encompassing and efficient strategies in the world to slow the rate of infection and to care for those affected by HIV/AIDS. The program has stabilized the advance of the epidemics through free distribution of drugs and focused educational and awareness campaigns.

The Bank has also been involved in providing assistance for small scale agriculture and production in innovative ways, which empower local communities in the poor Northeast and other regions to do their own investments and manage their own production. A second generation of these projects is linking the small producers to markets, further increasing income and wellbeing.

CONTACTS:

Mauro Azeredo
Senior Communications Officer (in Brazil)
email: mazeredo@worldbank.org