Brazil has not been immune to the impact of the global financial crisis, but this has not stopped it overtaking the UK as the sixth largest economy in the world and remaining a favoured destination for international investors. In the process, it is becoming an engine of growth for other countries in South America.
GDP growth fell from 7.5 percent in 2010 to 2.7 percent last year, as the industrial sector suffered from falling demand for its exports, but the agriculture sector remained healthy and expanded by 8.4 percent.
Unemployment is at its lowest levels on record, and standards of living have improved markedly. Over the year, family consumption expanded by 4.1 percent and government consumption by 1.9 percent.
For the long term, there is great hope of developing Brazil’s huge offshore oil reserves, which have been roughly estimated to exceed 100 billion barrels. With such reserves, Brazil could become a major world supplier. Current output of 2.8 million barrels a day (including ethanol) only allows Brazil to satisfy its own needs. More than 90 percent of Brazil’s oil production is offshore in very deep water.
A consortium of the state oil company Petrobras, BG Group and Petrogal discovered the Tupi field in 2007, which contains substantial reserves in a geological ‘presalt’ zone 5,500 m below the ocean surface under a thick layer of salt. Since then, several more pre-salt finds have been made, although there are significant engineering challenges to overcome. However, Brazil already has a substantial industrial infrastructure, and Petrobras is developing its own expertise in the offshore oil industry, with the recent development of a $1 billion research centre in Rio de Janeiro.
The country is also a leader in the development of hydropower, and companies in the industry are busy establishing technology centres to develop environmentally friendly power turbines. Recent projects have included ‘run-of-river’ plants, which require no dam, reservoir or flooding to generate electricity.
Much of this kind of technical innovation is expected to be on show at the Rio+20 summit on sustainable development in June this year.