COUNTRY ANALYSIS REPORT
In-depth PESTLE Insights
Publication Date: May 2010
This profile analyzes the political, economic, social, technological, legal and environmental structure in Brazil. Each of the PESTLE factors is explored on four parameters: current strengths, current challenges, future prospects and future risks.
Brazil has taken a lead in improving trade relations, but corruption continues to be a problem Brazil is at the forefront of the international stage, and has made considerable progress in raising the profile of South America and encouraging trade within the region. To this end, Brazil is a founder member of Mercosul, along with Argentina, Paraguay and Uruguay. Bolivia, Chile, Peru, Ecuador and Colombia are currently associate members. The members of Mercosul are responsible for 75% of South America’s GDP and it is the world's fourth-biggest integrated market. Mercosul has been successful in promoting increased trade among its members as well as with the outside world. Furthermore, Brazil was in the forefront for the formation of the Union of South American Nations (UNASUL), which was formally created in May 2008. President Lula proposed the floating of this new grouping in 2004, with the aim of promoting regional integration. However, despite its high profile, Brazil still suffers from corruption. In September 2006, the Supreme Court indicted José Genoino, a close associate of President Lula, on charges of money laundering and racketeering. This was the first time that the Supreme Court had indicted a senior politician. Corruption has claimed two other ministers of the Lula administration: Renan Calheiros, a minister of mines and energy from the centrist Partido do Movimento Democratico Brasileiro (PMDB), which is Lula’s most important coalition partner; and a minister of racial equality. These events will damage the administration's reputation. According to Transparency International's Corruption Perceptions Index for 2009, Brazil is ranked in the 75th place out of 180 countries. Corruption is perceived to be widespread in Brazil and businesses are expected to encounter corruption while bidding for government contracts.
Brazil: Country Analysis Report – In-depth PESTLE Insights © Datamonitor. This brief is a licensed product and is not to be photocopied
Published 05/2010 Page 1
Although liberalization of trade has increased exports, Brazil's infrastructure remains inadequate A lot of sectors that were under government control have been opened up for the private sector. These sectors saw a spurt in investment activities. This has resulted in optimum utilization of available resources and has also increased efficiency. However, infrastructure in Brazil has suffered from years of underinvestment. The Programa de Aceleracao do Crescimento (PAC) program aims to improve the infrastructure in the country. There is considerable deficit in the transport infrastructure, although railways and ports have shown tremendous improvement since the 1990s. Although roads between major urban centers are good, many smaller roads are unpaved. Air transport underwent a serious crisis in 2007 and the air traffic control network needs to be strengthened. There are also concerns with shortages of energy supply, which is said to be holding back Brazil in terms of its GDP growth. Increases in social spending puts pressure on the social security budget Brazil's Senate passed, in May 2010, a bill that gave final approval for an increase in social-security benefits of 7.72% during 2010 and it has also eliminated incentives for workers to delay retirement beginning in 2011. The government estimates reveal that the changes could cost the government more than BRL 6 billion ($3.3 billion) annually. This is likely to put more stress on the already burgeoning social security deficit in the country. The government has initiatives to improve R&D but teaching...
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