Despite ranking as the ninth-largest economy in the world, Brazil hasn’t been on par with other emerging economies when it comes to GDP growth rates. In recent years, the Brazilian economy has flatlined. For the sake of comparison, United States GDP is roughly ten times the size of Brazil’s and continues to grow at a faster rate. India’s GDP, similar to Brazil’s, is growing three times faster. How do we explain this discrepancy?
Brazil remains insular, with 85 percent of its GDP based on domestic consumption and industry. International trade represents only 15 percent of the total economy. The world mistakenly regards Brazil as a commodities country, due to the overrepresentation of commodity sectors on the São Paulo stock exchange.
In reality, the Brazilian economy is fairly similar to the U.S. economy, where domestic consumption rules GDP growth. However, unlike U.S. consumers, Brazilians have very limited access to fairly priced credit.