M RahmanPESTEL analysis of Brazil (Country Profile)
This detailed PESTEL analysis of Brazil (Country Profile) aims to explore some of the political, economic, social, technological, environmental, and legal factors that affect Brazil today. Brazil is the fifth largest country in the world by area. It is officially known as the Federative Republic of Brazil.
Political factors affecting Brazil
Brazil is the most powerful country in South America. It is also considered a middle-power that has moderate influence in international affairs. Being one of the largest democracies in the world has offered it huge potentials in many fields. In fact, many political analysts hold the view that it has the potential to become a superpower in the future.
Brazil is a member of several international organisations and unions e.g. the International Monetary Fund, United Nations, World Bank, World Trade Organization, the G20, Mercosur, and BRICS. It is also a key partner of the OECD.
Brazil enjoys strong political and economic relations with the United States. Both countries have a shared commitment to sustainable economic growth, international peace, and security. However, Brazil’s relations with neighbouring Venezuela are not that great.
In addition to the foreign policy challenges, there are some other issues that have hit Brazil very hard in recent years. For instance, corruption is one of the biggest problems in the country. It is very rampant and hardly is there a sign of cessation.
In the Corruption Perceptions Index of Transparency International, Brazil now ranks 94th among 180 countries and territories in the world (Transparency International, 2023). Likewise, the so-called Carwash probe exposed a massive kickback scheme involving a number of politicians and business elites in the country.
In fact, many analysts believe that corruption is one of the biggest barriers to economic development in Brazil. Similarly, scandals, election crisis, right-wing policies at the highest levels of the government over certain issues, and conflict between the president and the state governors and mayors over quarantine and lockdowns were issues of grave concerns in the last several years.
Economic factors affecting Brazil
Economic environment is the next of topic of discussion in the PESTEL analysis of Brazil (Country Profile). Brazil has a long history of being among the 10 largest economies in the world by nominal GDP. However, it is currently at the 13th position (Banco Santander, 2023).
Brazil ranks No. 1 in the list of Top 10 coffee producing countries in the world. It is also the leading sugar producer and exporter. 25% of sugar produced in the country caters for the local needs, while the rest 75% is exported to more than 100 different countries.
Soybeans, Iron Ore, Crude Petroleum, Raw Sugar, and Cars are the top exports of Brazil. On the other hand, Refined Petroleum, Vehicle Parts, Packaged Medicaments, Integrated Circuits and Cars are the top imports.
The top export destinations of Brazil are China, the United States, Argentina, the Netherlands, and Germany. The top import origins are China, the United States, Argentina, Germany and South Korea.
As mentioned above, Brazil is a key part of the BRICS (Brazil, Russia, India, China, and South Africa) group. It has undertaken a number of initiatives to encourage foreign direct investment (FDI) into the country. It is indeed one of the largest FDI recipients in the world.
There are number of challenges facing the Brazilian economy today. The current economic and political crisis, decreased consumer demand, complicated tax system, tariff and non-tariff barriers, and poor infrastructure to name but a few in this regard.
However, Brazil offers numerous opportunities for both domestic and international companies in several sectors such as infrastructure, health, aviation, energy, IT, education, and tourism. Many multi-national companies are indeed operating successfully in the country.
Social factors affecting Brazil
Brazil is one of the most diverse countries in the world. It has a total population of approximately 216.5 million (Worldometer, 2023). The life expectancy for men is 72 years and 79 years for women. Portuguese is the major language, while Christianity is the major religion in the country (BBC, 2023).
Brazil is known for its vibrant social life, and it is home to some of the world’s most vibrant cities. From the bustling streets of Rio de Janeiro to the laid-back vibes of Salvador, there is something for everyone. Brazil is also home to a variety of festivals throughout the year.
Brazil is also home to some of the best food in the world. From traditional Brazilian dishes to international cuisine, there is something for everyone to enjoy. Some of the best places to find good food in the country l include street vendors, restaurants, and bars.
There is no doubt that Brazil has made significant economic progress over the last few years. It lifted millions of people out of poverty in the last 15 years; however, slightly less than 10% of the population still live in poverty (Oxfam, 2023). In addition, the gap between the rich and the poor is still widespread. Likewise, criminal violence is also a major area of concern for the country.
There are some other social challenges facing Brazil today. For instance, millions of children lack adequate education, housing, and health care. Thousands of children live and work on the streets in dreadful conditions and are exposed to drugs, crime, and prostitution. Discrimination on the basis of gender and race is also rampant in Brazil.
Putting social challenges aside, the middle class is rapidly growing in Brazil. Brazilians are very modern and up to date with the fashion world. Many people love buying expensive, luxurious, and branded products.
Brazilians love football frantically and they are always one of the leading contenders of the world champion title in FIFA World Cup. In fact, it has produced some of the greatest footballers of all times e.g. Pele, Ronaldo, Ronaldinho, Neymar, Roberto Carlos, and others (the list is really long!).
Technological factors affecting Brazil
Technological environment is the next element to discuss in the PESTEL analysis of Brazil (Country Profile). Sao Paulo has witnessed a technology boom in recent years, particularly in software for Web and mobile development.
Brazil is the largest ICT market in Latin America, and one of the largest in the world. Brazilians are among the most enthusiastic users of social media in the world. They also prefer using mobile phones or communicating with family and friends using the Internet. Therefore, not many homes have a fixed line for a telephone.
The Government of Brazil invests heavily in innovation and digital transformation projects. Many multinational companies are also heavily investing in Brazil’s ICT sector. However, it is worth mentioning Brazilian enterprises are behind those in OECD countries in the use of the Internet and digital technologies (OECD, 2023).
Environmental factors affecting Brazil
Brazil is one of the most beautiful countries in the world. The Amazon River and Rainforest, Iguaçu Falls, 62 National Parks, 2,000 beaches stretching along the country’s shoreline and hundreds of conservation areas are some of the attractions that catch the attention of millions of tourists every year. In fact, the tourism sector is rapidly growing in Brazil and contributes immensely to the economy of several regions of the country.
However, Brazil faces some grave environmental challenges. For instance, deforestation, illegal wildlife trade, illegal poaching, air pollution, water pollution, land degradation, and severe oil spills are the most challenging ones.
It is worth mentioning that Brazil has taken a number of environmentally friendly initiatives over the years to deal with the environmental challenges. However, there is still much work to be done.
Legal factors affecting Brazil
Legal environment is the last element to discuss in the PESTEL analysis of Brazil (Country Profile). A detailed discussion on the country’s legal environment is beyond the scope of this article. Therefore, it touches briefly on some aspects of the business and employment laws.
It is a very common practice for contracts of employment to be written, even though written contracts of employment are not usually required under the Brazilian law. While Brazil encourages foreign direct investment in general, it puts restrictions in certain sectors.
For instance, investing in postal services, financial institutions, nuclear energy, and private security and transport is either restricted to Brazilians only or subjected to the authorisation of the Government of Brazil (Thomson Reuters, 2022).
Foreign employees must obtain residency permits and visas to enter and work in Brazil. A standard working day is 8 hours long. Employees can work overtime; however, overtime work is usually restricted to 2 hours per day. They are also entitled to sick pay if they can produce acceptable medical documents.
Summary of PESTEL analysis of Brazil (Country Profile)
Brazil is a vibrant country that offers a variety of experiences for its residents and tourists. It also offers great prospects for both local and international businesses. From the vibrant cities to the lush jungles, from booms in IT to booms in exports, there is something for everyone. However, the country is not without some grave challenges that have been discussed above.
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Last update: 08 February 2023
References:
Banco Santander (2023) Brazil: economic and political outline, available at: https://en.portal.santandertrade.com/analyse-markets/brazil/economic-political-outline (accessed 08 February 2023)
BBC (2023) Brazil country profile, available at: https://www.bbc.co.uk/news/world-latin-america-18909529 (accessed 08 February 2023)
OECD (2023) Brazil in the digital transformation, available at: https://www.oecd-ilibrary.org/sites/c5840db0-en/index.html?itemId=/content/component/c5840db0-en (accessed 06 February 2023)
Oxfam (2023) Brazil: extreme inequality in numbers, available at: https://www.oxfam.org/en/brazil-extreme-inequality-numbers# (accessed 06 February 2023)
Thomson Reuters (2022) Doing business in Brazil, available at: https://uk.practicallaw.thomsonreuters.com/0-503-8385?transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&bhcp=1 (accessed 01 February 2023)
Transparency International (2023) Corruption perceptions index 2018, available at: https://www.transparency.org/en/cpi/2022 (accessed 08 February 2023)
Worldometer (2023) Brazil population, available at: https://www.worldometers.info/world-population/brazil-population/ (accessed 08 February 2023)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.
