About

Brazil is the largest nation in both South and Latin America, formally known as the
Federative Republic of Brazil. Brazil is the world's fifth-largest country by area and sixth-
most populated country, with a total area of 8.5 million square kilometres (3.2 million square
miles) and a population of over 211 million people. Brazil has a 7,491-kilometer coastline
that is bordered on the east by the Atlantic Ocean. Except for Ecuador and Chile, it shares
borders with any other South American country.

Economy

Brazil has the ninth largest economy in the world. The nation is still repairing itself after the
recession of six years ago, when the economy shrank by nearly 7%. The Brazilian economy,
on the other hand, had been recovering slowly but steadily before the COVID-19 pandemic
struck, triggering a projected GDP decline of - 5.8% in 2020. According to the IMF's October
2020 projection, the economy will rebound in 2021 with a 2.8 percent growth rate, followed
by a 2.3 percent growth rate in 2022. The IMF updated its GDP growth predictions for Brazil
to 3.6 percent in 2021 and 2.6 percent in 2022 in its most recent January 2021 World
Economic Outlook update (representing a gap from October 2020 WEO projections of +0,8
percent and +0,3 percent, respectively).

Despite the COVID-19 pandemic, the inflation rate was forecast to be 2.7 percent in 2020
and is projected to remain reasonably steady, at 2.9 percent in 2021 and 3.1 percent in 2022.
Despite this, rates have risen by 25% since the recession, but wages have not. So, despite the
fact that inflation is currently under control, private consumption has yet to accelerate.
shows no signs of easing up on its pledge to austerity and fiscal discipline. 

The Brazilian government claims that the worst is over for the economy,
debt is currently at 101.4 percent, and it is expected to rise to 102.8 percent in 2021 and 103.5 
percent in 2022 in the next two years. The nation is already in debt, and the president claims t
hat the key cause is the pension system, as he has previously said people retire too early with 
too many benefits.

In 2020, Brazil's unemployment rate increased to 13.4 percent. The government, on the other
hand, believes that the true numbers are far higher, as an official unemployment report
indicates that about 32 million people are underemployed, meaning they are either not
working or working less than they should be. Furthermore, even those who are working also
have part-time employment. In fact, the government estimates that 39.3 million people, or
41.6% of the country's employed work force, have informal jobs. Brazil is also a major
manufacturing force that has reaped the benefits of its mineral reserves. The nation is the
world's second-largest iron exporter, as well as a major producer of aluminium and coal.
Brazil, as an oil producer, aspires to be energy independent in the near future, with reserves
that could place it among the world's top five oil producers.

Two- Wheeler Industry

Many of the world’s large automobile manufacturers have set up production plants in Brazil.
The industry sector contributes 17.9% to the GDP and employs 19.59% of the population.
The growth in market was sluggish in 2014 due to economic crisis, Present projected to grow
at a CAGR of over 9% till 2025. on account of increasing traffic congestion and rising
demand for connectivity in mid-sized and smaller cities. Brazil is the largest two-wheeler
market in South America and ranks under top 10 in global two-wheeler market. Another
contributor towards projected growth would be lack of proper transport and growing
population.

Market can be further classified in to:

Engine
Vehicle Type Capacity Region
<100
Motorcycle CC North
100-125
Scooter CC South
126-250
Electric Two-wheeler CC East
250-500
CC
>500CC
factors

1. Motorcycle is the dominating segment in the market, as it has high fuel efficiency with
better handling when compared with their counterparts. However, inclination towards
electric two-wheeler is increasing due to growing environmental concerns.
2. 100-125cc segment is witnessing extensive adoption among riders due to cost efficiency
and better fuel economy.

Distribution of the two-wheel vehicles fleet in Brazil in 2018, by region

Major players operating in the country’s two-wheeler market include Moto Honda da
Amazônia, Ltda., Triumph Motorcycles Ltd., Harley Davidson Inc., Yamaha Motor do Brazil
Ltda., Dafra Motos, Suzuki Motor Corp., Bayerische Motoren Werke AG and Kawasaki
Motors Corp. Major companies are developing advanced technologies and launching new
products to stay competitive in the market. Other competitive strategies include mergers &
acquisitions and new product developments. Honda offers a wide range of motorcycle and
scooter models in the Brazilian market to maintain its commanding share. Consequent to
which, the company was able to grab a volume share of over 80% in 2017 in Brazil.
Moreover, the company’s share is further expected to rise in the country during the forecast
period.
Political-legal

Jair Bolsonaro, a former military officer, was elected president in January 2019 on the basis
of addressing law-and-order issues. He had campaigned on a clean slate that would rid the
country of corruption, violence, and other wrongdoing. Instead, scandals and corruption have
shaken his administration by directly and indirectly implicating him, and his actions are
widely seen as illegal. Exacerbating this situation is the comprehensive impact of the
coronavirus on all aspects of life, governance and democracy in Brazil. 'The Trump of the
Tropics,' as he is known. Jair Bolsonaro promised after winning the presidency of Brazil in
October, "We are going to change the destiny of Brazil." The So Paulo stock exchange index
has become one of the world's highest performing indices so far in 2019, and FDI appears to
be flowing back into the country only a few weeks into Bolsonaro's presidency (he took
office on January 1). According to Goldman Sachs, “investors are feeling optimistic and
confident that this administration will be able to turn around an economy that has been
underperforming for nearly five years.” “[The government] has a market-inspiring agenda
that includes liberalisation, increased productivity of state-owned enterprises, and increased
public spending.

Culture

Brazil is an economic superpower with a Portuguese-speaking population of over 200

million people. Given Brazil's significant position in global trade, mastering Brazilian
Portuguese is an important skill for many international companies. Brazilians are masters at
establishing rapport and relationships with clients and co-workers. In reality, when it comes
to negotiations (which often include business lunches or dinners), Brazilians prioritise
interactions with ‘people,' not ‘companies.' When working in a Brazilian environment, it is
best to maintain an accessible, polite, yet professional demeanour. Discussion between
business counterparts is always important, so it is not recommended to use a tone that could
be perceived as cold, impersonal or 100% business.
PEST Analysis of Brazil: High Potential for Growth

Political Factors
The government is constructive and stable, and the nation now has no political uncertainty.
For how long, however, this cannot be expected, as Brazil's recent history shows that things
can change overnight, especially during elections, as the political situation tends to heat up a
lot.
Corruption in the country remains a major problem and it is worsening. It has escalated to the
point that even opening a small business (sometimes) may require you to make payments to
government officials and representatives. Brazil is ranked 72nd out of 180 countries when it
comes to corruption, according to a Transparency International report. This is even higher
than economies like Turkey, Bulgaria, and Cuba.

Economic Factors
Brazil's growth potential is exceptionally high, due to a massive population and FDI inflows.
There is a major trend of an increasing middle class and the gap between the wealthy and the
poor is slowly diminishing. In addition, the Central Bank has effectively reduced the
possibility of devaluation of currencies and brought inflation under control. When it comes to
the dollar, however, the currency is overvalued, which adversely affects the country's exports.

Both domestic and international firms are handled equally, and the cost of labour is
considerably low. For import duties, a system is in place which, based on the number of
effective import years, progressively reduces the tariff. In addition, the corporate tax is set at
15 percent and there are no incentives in the country to make money. The tax rates are
considerably high in relation to other countries, such as Greece and Ireland.

Social Factors
Brazil's growth potential is exceptionally high, due to a massive population and FDI inflows.
There is a major trend of an increasing middle class and the gap between the wealthy and the
poor is slowly diminishing. In addition, the Central Bank has effectively reduced the
possibility of devaluation of currencies and brought inflation under control. When it comes to
the dollar, however, the currency is overvalued, which adversely affects the country's exports.
Both domestic and international firms are handled equally, and the cost of labour is
considerably low. A system is in place for import duties which, depending on the number of
effective importing years, progressively reduces the tariff.

Technological Factors
Brazil possesses a poorer technical infrastructure and investment compared to countries such
as the US and Russia, but efforts are being made to push the creation of technology centres
across the world. Nevertheless, IT is a market in which Brazil has been constantly developing
and it now ranks 53rd in the world.
Environmental

Brazil's rainforest areas, which are the country's crown jewel, have sadly experienced
extensive deforestation as a result of the country's developing agricultural industry over the
last several decades. Despite the global awareness surrounding the importance of limiting
deforestation in this country, data recently acquired from Imazon, Brazil’s forest monitoring
group, released that the Amazon’s forest lost as of June 2018 skyrocketed to 1,169 square
kilometers. To put this number into perspective, this area is 343 times the size of New York’s
Central Park and has increased by 108% since September 2007. Waste disposal, particularly
in urban centers, is another major environmental problem in Brazil that has caused major
protests to arise in 2013.

Porter’s Diamond
Factor conditions

Firm strategy, Structure, and rivalry

Demand conditions

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