This article is part of the special report: Challenging perceptions: Brazil makes a comeback

Brazil has been in the spotlight many times over the past decade. Its hosting of the 2014 Fifa World Cup and the 2016 Olympic Games showed the world the now iconic images of its coast and hinterlands, projecting an upbeat picture of a nation that is moving forward, enjoys life and has seen rapid growth. But the recession and political turmoil in the mid 2010s, and the scrutiny that came with its handling of the Covid-19 pandemic, have highlighted some of the challenges that it continues to face. 


As it emerges from the pandemic, international perceptions of the country are shifting as it continues with its series of reforms aimed at reducing public spending and debt, driving investment and lowering barriers to foreign direct investment (FDI). In turn, this is helping its efforts to join the Organisation for Economic Co-operation and Development (OECD) as a full member — something that moved a step closer in January 2022 when the OECD Council decided to open accession discussions with the country.

Size matters

Brazil is the largest economy in Latin America and has traditionally been a popular destination for international companies looking to expand their regional footprint. Its 213 million-strong population, growing urban middle class, wealth of natural resources and favourable geographic location have encouraged firms to set up shop here to access increased internal demand, and the growing number of business opportunities in strategic sectors such as agribusiness, energy, infrastructure, real estate and innovative technologies.

Apex-Brasil, the country’s investment promotion agency, reports that there is a strong pool of local talent that is motivated to develop new skills. Universities and higher education institutions are producing the next generation of workers for a variety of internationally focused sectors including spacetech, biotech and renewable energy.

Reform of labour laws is giving employers more flexibility. “The economic liberty law of 2019 has been seen as a huge contribution to economic growth, as it relieves governmental interference in entrepreneurial activity,” says TMF Brazil managing director Rodrigo Zambon.


According to the World Bank, in 2020 the country’s gross domestic product (GDP) was $1.4tn, making it the 12th largest economy in the world and the largest in South America. 

In its May 2022 economics research assessment of Brazil’s economy, Goldman Sachs revealed that it is upgrading its forecast for real GDP growth in 2022 from 0.6% to 1.25%, while downgrading its predictions for 2023 from 1.9% to 0.9%.

“This will be a year of two very distinct halves,” Alberto Ramos, head of the Latin America Economic Research team in Global Investment Research at Goldman Sachs, tells fDi. “In the first half there will be the residual effects of the reopening — particularly among some services segments — significant fiscal stimulus and the use of pent-up savings.” 

He believes that part of the resilient first-quarter growth momentum will carry over to the second quarter, but the second half of 2022 will be difficult given very tight domestic financial conditions, double-digit inflation, record-high levels of household debt and the uncertainty surrounding presidential elections in October. 

Geopolitics is also having an impact on its economy, despite the geographic distance from the war in Europe. Giovani Loss, oil and gas partner at legal firm Mattos Filho says: “The increase in oil and gas prices as a result of the war in Ukraine is making the oil and gas sector in Brazil more attractive. In particular, this is because we have lots of reserves yet to be developed.” 

Foreign entrants

Having been hit by the pandemic in 2020, which saw FDI inflows plummet in key sectors such as oil and gas, energy, financial services, and travel and tourism, the country started to bounce back in 2021. According to Unctad, Brazil received $58bn in FDI — almost double 2020’s amount — but still below pre-pandemic levels of $72bn in 2019.

The energy, infrastructure, sustainable tourism and technology sectors have all been among the winners of new investments, driven by a number of investment partnership programmes (PPIs), auctions, leasing and privatisation initiatives, which are continuing into 2022 and beyond. Recent headline grabbers include the privatisation of the national insurance company La Caixa and the sale of several Petrobras subsidiaries, including Petrobras Distribuidora and Liquigás.

PPIs, which were created by the federal government in 2016, form the base of Brazil’s attempts to reinvent itself as an investment destination for large-scale infrastructure projects. 

Apex-Brasil reveals that since 2021, PPIs have been involved in more than 50 auctions, including one for the country's 5G spectrum in November last year, which mobilised $7.7bn in investment, making it the largest auction of telecom assets in Latin America to date. Among the successful bidders were Spain’s Telefonica, which runs Brazil’s largest wireless carrier under the Vivo brand, Telecom Italia’s TIM Brasil, and new domestic player Winity II. Other notable auctions include the sixth round of airport concessions valued at $1bn and the $988m East–West Integration Railway.

Although the country is making progress in liberalising its markets, reforming labour laws and easing bureaucratic pressures, businesses say there is still a way to go. According to TMF Group’s Global Business Complexity Index 2021, Brazil comes first in its ranking of the top 10 most complex jurisdictions in which to do business. Mr Zambon says the country has a multi-layered system of governance which can make company incorporation bureaucratic and slow. He adds that tax rates are complex, too. 

Innovation, research and development

Technology and entrepreneurship are becoming important components of Brazil’s economy. As well as assisting home-grown firms to support local markets, the country is also serving as a launchpad from which domestic companies can establish their business roots before spreading their wings globally.

According to Statista, Brazil is one of the top five economies for business creation and has been the launch pad for more than 13,000 start-ups over the past decade. 

It is also home to several ‘unicorns’ (companies values at more than $1bn). One of the country’s biggest start-up successes is Nubank, which was founded in São Paulo in 2013 and became the most valuable financial group in Latin America with a valuation of almost $50bn after its initial public offering in 2021.

Embrapii, Brazil’s research and industrial innovation agency, drives the country’s development of new products, processes and business solutions. According to Apex-Brasil, in seven years, Embrapii has provided more than €307.6m to support 1400 projects and 1000 companies, from multinationals to small and medium-sized enterprises.

One area in which innovation is making a difference is in the creation of cleaner cities. Maurizio Bezzeccheri, head of Latin America at energy firm Enel, reports that his company is working on the Urban Futurability project, which aims to transform São Paulo’s financial district, Vila Olympia, into a city of the future. “We’re using new solutions to digitalise the power network,” he explains. “All in all, Brazil offers a very positive scenario for business expansion and we definitely expect to consolidate our position here.”

In association with Apex-Brasil. Writing and editing were carried out independently by fDi Intelligence.