Coface Group


Population 203 million
GDP per capita 11,573 US$
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major macro economic indicators

  2012 2013  2014 2015(f)  2016 (f)
GDP growth (%) 1.8 2.7 0.1 -3.7  -3.0
Inflation (yearly average) (%) 5.4 6.2 6.4 9.5  7,5
Budget balance (% GDP) -2.6 -3.1 -6.2 -10.0  -8,7
Current account balance (% GDP) -2.4 -3.4 -4.4 -3.4  -2,4
Public debt (% GDP) 54.8 53.3 58.9 67.6  74,5


(e) Estimate  (f) Forecast


  • 6th-largest economy worldwide
  • Growing active population
  • Varied and abundant mineral and agricultural resources
  • Advanced manufacturing industry: aerospace, chemicals, pharmaceuticals and oil engineering
  • Resistance to external shocks: creditor external position, considerable reserves


  • Lack of qualified labour/incomplete educational system
  • Shortcomings in infrastructure (transport, energy)
  • Insufficient investment
  • High production costs (wages, energy, logistics and credit)
  • Public expenditure high and inefficient
  • Importance of corruption and inequalities

Risk assessment

Recession to last into 2016

Slipping into recession in 2015, the country has few chances of seeing the beginnings of a recovery in 2016. Indeed, the outlook for the economy is less than encouraging due to an unfavourable internal and external environment for growth. Internally, household consumption, the main growth driver, is expected to continue to suffer from the high cost of credit and lower real wages due to the high level of inflation. The banking sector, exposed to household indebtedness, will effectively be forced to restrict the credit supply because of the expected increase of non-performing loans linked to the rise in unemployment (high level of unemployment around 9% in 2015), which is also likely to hamper the recovery in consumption. The repercussions of the Petrobras scandal and the company's announced cuts to its 2015-2019 investment programme continue to discourage investment and activity by related businesses, especially in building works because of the involvement in the scandal of large groups in the construction industry. The industry is likely to continue to suffer from the lack of infrastructures and skilled labour, which is reflected by costs that are rising faster than productivity.
External trade is likely to remain affected by the slowdown in Chinese demand and its impact on price of minerals. Export competitiveness is set to suffer from weak transport infrastructures and rigid labour laws, despite the gains linked to the ongoing depreciation of the real against the dollar.
Finally, inflation is set to fall with less pressure on prices thanks to the advancement of the reduction of the gap between the administered prices (fuels and energy) and the market prices in 2015 and weak domestic demand. It is, however, likely to remain above the target set by the central bank (4.5%), given the depreciation of the Brazilian currency. Ongoing high inflation would, meanwhile, limit the prospects of a cut in the benchmark SELIC interest rate during 2016.


Worsening budget situation set to continue

The adjustments to fiscal policy begun in 2015, shortly after the re-election of President Dilma Rousseff, are having trouble achieving their aims: inflation and the public deficit have continued to rise. The lack of a majority in Congress and the recession in which the country still finds itself have impacted on the adjustment in the public finances, which in turn led to the decision by two of the rating agencies to downgrade the country to speculative. In 2016, the objective of re-establishing equilibrium in the public finances, in particular involving the return to a primary surplus already appears in jeopardy given the successive downward revisions of the budgetary targets. Despite the expected rise in exceptional income, thanks notably to the sale of assets (hydroelectric power stations, land, buildings) and additional budget cuts (including social spending), the weakness of activity is likely to continue to hamper revenue collection. The introduction of new taxes and duties, along with the gradual reintroduction of the financial transactions tax (CPMF), considered essential for achieving the fiscal objective in the medium term, is struggling to gain approval in Congress. A widening budget deficit would result in an alarming public debt dynamic.


Improvement in the current account deficit driven by lower imports

In 2015, the current account deficit improved, thanks notably to weaker imports on the back of slower private consumption and investment, as well as the depreciation of the Brazilian real, which made imports more expensive. This trend is set to continue in 2016: the economy's weakness is likely to dampen demand for imported goods, which will partially offset the fall in exports of commodities (iron ore, soya beans and sugar, in particular) and the slowdown in Chinese demand. Depreciation of the local currency would also help boost export competitiveness, but exports will continue to be hit by low commodity prices. Trade in services and income balance (tourism, dividends, interest) will also remain in deficit, while the current account deficit should be covered in part by foreign direct investments, which represented about 2.6% of GDP in 2014, excluding reinvestments.


Government losing momentum and weakened by the recession and the lack of political support

President Dilma Rousseff's position remains precarious. Her image has continued to worsen since she was re-elected in October 2014. Tainted by the Petrobras corruption scandal, the president faces growing popular discontent and weak support from the political class, including from within her own party. The government is struggling to meet the demands of the middle-class, exasperated by corruption and by declining purchasing power.
Inflation, still high, associated with rising unemployment levels, could moreover foment social unrest and increase pressure on the President to step down in 2016. This risk will be increased if the impeachment process against her is effectively implemented.


Last update: January 2016



Bills of exchange (letra de câmbio) and, to a lesser extent, promissory notes (nota promissória) are especially used in local commercial transactions. The validity of either instrument requires a degree of formalism in their issuance.


The use of cheques is relatively commonplace – often post-dated in practice and thus transformed into credit payment instruments – and their issuance requires comparable formalism.


Although the use of the above credit payment instruments for international settlements is not advisable, they nonetheless represent, in case of default, an effective means of pressure constituting an extra-legal enforcement title that affords creditors with privileged access to enforcement proceedings.


Theduplicata mercantil, a specific payment instrument, is a copy of the original invoice presented by the supplier to the customer within a 30 days time for acceptance and signature and then can circulate as an enforceable credit instrument.


Bank transfers, sometimes guaranteed by a standby letter of credit, are also commonly used for payments in domestic and foreign transactions, offering relatively flexible settlement processing particularly via the SWIFT electronic network to which major Brazilian banks are connected.


For moving large sums, various highly automated interbank transfer systems are available like, since April 2002, the STR real time Interbank Fund Transfer System (Sistema de Transferência de Reservas) managed by Banco Central do Brasil or the RSFN / National Financial System Network (Rede do Sistema Financeiro Nacional) linking various financial operators in Brazil in real time.


Debt collection


Out-of-court settlement begins with telephone contacts followed up as necessary with a final demand by recorded delivery letter requesting debtor to pay the outstanding principal, increased by past-due interest stipulated in the transaction agreement. Absent an interest-rate clause, the civil code stipulates use of the penalty interest rate imposed on tax payments, which is one per cent per month past due.


Considering the slow pace and the cost of legal proceedings, it is always advisable to negotiate directly with delinquent customers where possible and attempt to settle on amicable basis, taking into consideration that a repayment plan may last for a two years period. If the negotiation in amicable basis was not successful, the debt can be claimed in Court.


The legal system comprises two types of jurisdiction the first of which is at the State level.


Each Brazilian State has its own courts – there are 26 States, plus theDistrito Federalof Brasilia – notably including a Court of Justice (Tribunal de Justiça) whose judgments can be appealed at the Federal level. Legal costs vary from State to State.


The second type of jurisdiction involves the Federal Courts. There are five regional Federal Courts (Tribunais Regionais Federais / TRF), each with its own geographic competence encompassing several States. The five TRF are located respectively in Brasilia (região 1), Rio de Janeiro (região 2), São Paulo (região 3), Porto Alegre (região 4), and Recife (região 5).


For recourse on no-constitutional questions, TRF judgments can be appealed to the highest court of law, the Superior Tribunal de Justiça / STJ that sits inBrasilia.


Brazilian law provides a wide range of legal measures to be used in defense of the rights of creditor against debtor. Six collection legal procedures are most commonly used:Processo de Execução(which is our main Enforcement Proceeding),Ação Monitória(which is a hybrid of an Enforcement Proceeding and a Standard Lawsuit),Ação Ordinária de Cobrança(Standard Lawsuit),Reintegração de Posse de Bem com Reserva de Domínio(Enforcement of a Retention of Title),Pedido de Falência(Bankruptcy Request) andCautelar de Arresto(which is a Preemptive Seizure of Assets).


The enforcement of an extrajudicial instrument is a legal type of enforcement granted to the creditor in order to allow him to claim his rights against the debtor and is the most direct and effective in courtvehicle to recover credits in Brazil, and does not require prior guarantees from foreign creditors.


Brazilian legislation moreover makes some documents enforceable, that are separated in two main categories :


legal enforcement titles including judgments made by a local court recognizing the existence of a contractual obligation, court-approved conciliations, arbitral awards, and foreign judgments covered by anexequatur,

extra-legal enforcement titles : bills of exchange, promissory notes,duplicata mercantil, cheques, official documents signed by the debtor, private agreements signed by debtor, creditor and two witnesses (obligatory), secured agreements, and so on.


The estimated duration of the proceeding is in average 1 year in the main States to reach a judgement on the matter.


The ação monitória is a special procedure that can be filed by any creditor with written proof of debtor's obligation that is not enforceable.The difference between this procedure and the Enforcement Proceeding is in the legal requirements and in the possibility of questioning the merit of the obligational relationship by the debtor in the course of the suit. Theação monitória is less speedy than a regular Enforcement Proceeding because if debtor presents an objection in the Court, the merits of the commercial relation will be thoroughly discussed in the same fashion of a Standard Lawsuit.


The estimated period of this lawsuit is on average 2 years.


Ordinary proceedings, presided over by an interrogating judge (inquisitorial procedure), are often formalist, because on this lawsuit will be done a scrupulous examination of evidence submitted by each party in conjunction with study of any expert reports ; finally, the main hearing during which the respective parties are heard  and after this the judgment will be made by the court.  It takes two to three years to obtain an enforceable judgment in first instance.


Enforcement of a Retention of Title It is a special procedure based on the retention of title of a  movable non-fungible asset, which remains until the agreed price is fully paid.


Bankruptcy Request (Chapter 7) - is a procedure that may ultimately be used as a way to pressure the debtor to execute an agreement, However, it cannot be overlooked, because it is one of the main courses of action in credit recovering.


The Precautionary Seizure represents a lien on the debtor's assets. Its purpose is to protect the assets from fraud against creditors or squandering promoted by the debtor.


The article 835 of the CPC establishes that, except in enforcement proceedings based on extrajudicial

enforceable instruments, the plaintiff, national or foreign, who resides abroad or leave Brazil during the course of the lawsuit, has to provide a bond in court with a security sufficient to pay the judicial expenses and the attorney's fees of the opposing party, unless it possesses real estate in Brazil in a value that ensures such payments. The purpose of this legal requirement is to protect any possible harm to the defendant or to the court in the case of defeat of the foreign plaintiff abroad, since, if it worked otherwise, it would create a costly obligation to start a collection abroad against the plaintiff for the judicial expenses or the Defeat fees. The value of the bond is up to 20% of the claim value, but it is usually smaller in collections of higher value (between 5% and 15%). The security can be provided either by the plaintiff or by a third party on its behalf.

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