BRAZIL PESTEL Analysis

By Aliomar Galvao

POLITICS
Rely on monetary policy
Cut interest rate from 12% in August
2011 to current 10.5% (expect to reduce
further)
Inflationary present real value of capital
reduces
Detrimental to consumers and therefore
demand for firms products
Negative short term outlook for start-up

By Aliomar
Galvao

POLITICS
Due to:
- Shortages in food supply, increasing domestic
demand, and increases in produces prices are
greatly impacting inflation;
- - But with lower GDP growth, inflation rate is
expected to reduce to 4.32%
- Important to note: with domestic consumption
increasing and oil prices likely to be raised in
the future, inflation will remain a challenge.

By Aliomar
Galvao

POLITICS
Growth Acceleration Programme
- USD 240 bn investment plan;
- Focuses on energy, logistics, social and urban
projects;
- Many infrastructures under current
construction are to facilitate the hosting of
2014 World Cup and 2016 Olympic Games
- Mind and long Term: improve the business
environment of the country ; ex, the efficiency
of transport; potentially attract even more
foreign investors.

By Aliomar
Galvao

POLITICS
Corruption
- Widespread corruption: when business are
seeking government contract, and also
occurring when business must deal with
government regulatory bodies;
- Lack of availability for government contracts
turn away new entrepreneurs representing a
barrier to entry;
- New entrants may be forced to commit
bribery to obtain contracts.

By Aliomar
Galvao

ECONOMICS
Current state of the economy:
- GDP USD 2,52 tn (2011)
- Exports in 2012 totalled USD 201,9 bn
- Main exports: manufactured goods, iron ore,
coffee, orange and other agricultural produce
- Its main export partners are China, US and
Argentina
- Imports in 2010 of USD 181,6 bn
- Government forecast growth of 3.5% in 2011,
compared with 7.5% in 2010.

By Aliomar
Galvao

ECONOMICS
FDI Ranking Foreign Direct Investment
Ranking give below is based a countrys economic
stability, economic risk, business and investment
climate:
Country
Score
FDI Amount
Brazil
8
2009 USD 25.95
bn
Malaysia
8.5
2010
USD 48.5 bn
Germany
9 9.5
2011
USD 55 bn
United Kingdom
9
USA
9 9.5

By Aliomar
Galvao

ECONOMICS
Composed of the Economy
Services
64%
Agriculture 8%
Industry
28%

By Aliomar
Galvao

ECONOMICS
Current Credit Rating

We expect the government to pursue

caution fiscal and monetary policies
that, combined with the country is
growing economic resilience, should
moderate the impact of potential
external shocks and sustain long-term
growth prospects.
Standard & Poors

By Aliomar
Galvao

SOCIAL Issues
Increasing proportion of middle class
will increase consumer demand:
High Class
11%
Formal middle class
17%
Informal middle class
50%
Lower class
22%

By Aliomar
Galvao

SOCIAL Issues
Education, current situation:
- 20% of population is still illiterate
- Fall behind other developing
economies (China / Russia)
- As a result many company are
reluctant to invest in Brazils economy
- Free education: would be rectified in
long term.

By Aliomar
Galvao

TECHNOLOGY
Spending on R&D is stable around 1% GDP.
Ensures the constant technological progress
and advancement
Information Technology:
750.000 new IT professional by 2010
300.000 of those professional will be required
to serve the technology export market.
Constant advancement and improvement un
this area.

By Aliomar
Galvao

TECHNOLOGY
Intercommunication and Global Communication:
More communication between areas of Brazil
develop trough the use of internet
More access to information technologies mean more
access to other area of the world.
Maturity of technology:
Recently becoming up to date with use of
technology;
Only some specific areas in techonology advancing
fast
Rate of adaption investing US$99

By Aliomar
Galvao

TECHNOLOGY
Technological Accessibility
Technological agreement: Ex,
European Union Agreement for
Scientific and Technological
Cooperative (2004)
Patents: highest levels of patents
application in South America.

By Aliomar
Galvao

LEGAL
The Civil Code
- Companies become corporate entities with
separate legal personality
- Registration with the Trend Board
- Creditors generally cannot seize the
partners assets to pay the company debts.
- Most common types of companies:
The corporation (S.A.)
Limit Liability Quotas Company (Ltda.)

By Aliomar
Galvao

LEGAL
Restriction on Foreign Investment
Only minority participation in: media,
financial institution, insurance
companies, Public Health, and others
Requisition of real state: same
condition apply to foreign individual
as to national individuals or entities.

By Aliomar
Galvao

LEGAL
Taxation
Legislation varies across states and
therefore increases complexity and
compliance costs. Senate suggested
a tax reform but yet to takes place
a merger of taxes
33% of GDP is tax

By Aliomar
Galvao

LEGAL
Regulation
Starting a business takes 120 days
Complete registration requires 18
procedures taking nearly 119 days,
compared with American Latin.

By Aliomar
Galvao

ENVIRONMENT
Policies for protecting the environment stopping
deforestation (in 2010 reduced by 70%) and
drastically reducing emission.
Compelled industries to initiate eco-friendly
combustion technique
Signed pacts with developed countries to jointly
develop the Amazon basin and alleviate
deforestation by unwanted setters.
Emission from deforestation Brazil is one of the
largest emitters of greenhouse gases; according
to the guidelines set out in the Kyoto Protocol.

By Aliomar
Galvao

Thank You!