Brazil Country profile

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Brazil has climbed out of an economic crisis, sparked by slumping global commodity prices, steep inflationary pressure, fiscal policy mismanagement and political uncertainty. The economy contracted 3.9% and 3.6% in 2015 and 2016 respectively—the first time GDP fell in two consecutive years since 1931. But prospects since 2017 have improved as growth has resumed, driven by a rebound in commodity prices, demand for agriculture and looser fiscal policy.

Looking ahead the improving labour market will support greater household consumption and growth. Greater policy certainty under the new administration and improving prices in key commodity exports will add further upside to the recovery. But the ongoing trade fracas between the US and China could weigh on global trade and commodity prices, while fiscal consolidation will also pose risks to the outlook.

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Per capita income has more than doubled between 2004 and 2016 lifting Brazil to upper-middle-income status. The number of people living below the poverty line—defined as citizens earning less than US$1.90 a day—has fallen to 5% from 18% in 2006. Despite these improvements, inequality remains high—the richest 10% of the population holds 40% of total income, and almost a quarter of the population lives in slums. Despite the marginal decline in GDP per capita in 2018, the expected improvement in Brazil’s key commodity prices should support the recovery in GDP per capita.

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