The past few decades have been a time of economic volatility for Brazil, which has oscillated between periods of high optimism and deep downturns. Recently, however, Brazil’s economy has proved impressively resilient in the face of global political shifts, sharp changes in trade policies, and extreme weather events that have disrupted international commerce.
Although the changing global landscape clearly presents challenges, it also is opening important opportunities for a country that is Latin America’s largest economy and a key player in the rising Global South. The US decision in July 2025 to impose 50% tariffs on certain Brazilian goods—a move that remains the subject of continuing negotiations—was a setback. But despite the uncertainty associated with this event, a number of global trends play to Brazilian strengths.
Those advantages include a large, growing, and stable domestic market of 213 million people. Brazil has abundant renewable energy, agricultural resources, and critical minerals that the world urgently needs. It has a dynamic startup ecosystem, especially in services and financial technology, and highly skilled tech talent. “Brazil has the biological, mineral, energy, and human assets needed to gain competitive advantage, and they will remain for a long time,” says João Paulo Ferreira, CEO of Natura, a beauty products company that uses regenerative business models. What’s more, Brazil’s geopolitical neutrality and active diplomacy with advanced economies and rising powers alike mean that it can be a reliable business partner for all.
Brazilian business leaders whom we interviewed over the past several months see a once-in-a-generation chance for the country to ignite a new cycle of sustainable growth. Brazil can become an even greater powerhouse in agribusiness, boost its share of global manufacturing value chains, become a base for energy-intensive data centers and industrial plants that need to reduce their carbon footprints, and emerge as a more strategic supplier of critical materials. Brazil can also enhance its role as a regional hub for digital startups and services and advance a new wave of infrastructure development to boost productivity, connectivity, and resilience nationwide.
To fully harness its potential, Brazil can address various structural roadblocks, including high trade barriers, overly complex taxation and regulatory systems, and underdeveloped transportation and logistics systems. In terms of exports, Brazil should move beyond its current reliance on commodities. According to CEO Francisco Gomes Neto of aircraft manufacturer Embraer, “We need less protection, more competitiveness, and a greater focus on value-added products.” In each of these areas, Brazil is making encouraging progress.
Brazil’s Economic Evolution
Brazil has experienced four decades of economic gyrations. In the late 1980s and early 1990s, hyperinflation raged, nearing 2,500% at one point. Inflation began to abate with a return to democracy in 1988 and the subsequent implementation of the Real Plan, which included fiscal reforms and a new national currency, the Brazilian real (R$).
Nearly a decade of economic stability followed, fueled by trade liberalization and deregulation, a sharp increase in foreign direct investment (FDI), and improved governance. The economy then surged as Brazil rode a global boom in commodity prices, FDI reached record highs, and the government boosted social programs that significantly reduced poverty. Nominal GDP growth averaged around 4% from 2004 through 2012. A collapse in commodity prices ensued, however, and that shock, compounded by poor fiscal management and political instability, sent the economy back into crisis.
Brazil’s most recent recovery began in 2020 with a wave of labor, pension, and tax reforms. Today, inflation is under control, and Brazil has become the world’s fifth-largest recipient of FDI, attracting $70 billion in 2024. (See Exhibit 1.) The poverty rate remains high at 24%, but that number is far lower than the figure of 54% recorded in 1998.
Today, Brazil has several economic challenges and shortcomings in its business environment. Trade barriers are very high, and free-trade agreements are few. Productivity has stagnated. Data from 2023 indicates that Brazil spends only 1.19% of its GDP on R&D, compared with an average of 2.4% for the 38 member countries of the Organization for Economic Cooperation and Development (OECD). Regulations and Brazil’s taxation system are complex and inefficient, with federal, state, and municipal governments often taxing the same activities. These factors, among others, explain why the World Bank ranks Brazil 124th globally in ease of doing business. Infrastructure is underdeveloped, too, constraining logistics and companies’ ability to scale up. For example, only 18% of Brazil’s roads are paved, about half the global average.
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These obstacles contribute to what is known as Custo Brasil—the high cost of producing goods and services in the country. The tax system alone accounts for R$240 billion to R$280 billion ($44 billion to $52 billion in US dollars) annually in operating costs, for example, and regulations and security issues add another R$160 billion to R$200 billion, according to Observatório do Custo Brasil, a government-backed research initiative. The central bank interest rate is currently set at 15%, among the highest in the world.
Brazil’s education system is another challenge. In the most recent Program for International Student Assessment scores, Brazilian 15-year-olds ranked 52nd worldwide in reading, 61st in science, and 64th in math, well below the average for OECD countries.
On a positive note, Brazilian policymakers are gradually addressing these problems. Infrastructure investment is growing. A long-awaited taxation overhaul, including the introduction of a value-added tax system, is in the works and promises to simplify compliance. In addition, Brazil can broaden its access to global markets by concluding pacts under negotiation between Mercosur and the EU, for example, and can pursue new ones with partners such as Mexico, the Association of Southeast Asian Nations, and the UK. And to improve its education system, Brazil has rolled out a new national curriculum through a public-private initiative to ensure that all students have the competencies they need for the world of work.
Structural Advantages That Could Fuel Sustainable Growth
Brazil possesses several robust fundamentals compared with many of its Global South peers. “If well leveraged, these unique natural advantages can reposition Brazil on the global stage,” says Anima Investimentos CEO Pedro Passos. “The key is to transform them into competitive advantage.” Indeed, concerted efforts to address certain shortcomings—such as infrastructure—can themselves drive growth.
Several global megatrends are now aligned with Brazil’s core strengths. Aside from its $1.3 trillion consumer market—the world’s eighth largest—the country has the following noteworthy advantages:
- Renewable Energy. Brazil enjoys one of the cleanest grid matrices in the world, as an estimated 88% of its electricity comes from renewable sources such as hydro, solar, and wind—the highest share among G20 economies. In addition to being low-carbon, Brazil generates very inexpensive electricity, with prices at around $103 per megawatt-hour. (See Exhibit 2.)
- Abundant Natural Resources. Geopolitical tensions and disrupted global supply chains have made reliable access to natural resources a strategic imperative. Brazil is rich in untapped minerals that are critical to high-tech manufacturing and the energy transition. It has the world’s second-largest reserves of graphite, the third-largest reserves of rare earth minerals, and significant reserves of copper, nickel, and lithium. Brazil also has 13% of the world’s fresh water, plentiful fertile land, and among the world’s greatest endowments of biodiversity. In addition to Amazon rainforest, it contains the Cerrado, which covers 200 million hectares in the country’s Central Plateau region and is the world’s most biodiverse savannah. The Cerrado plays a central role in global agriculture, producing 6% of the world’s beef and corn, 9% of its cotton, 25% of its soy, and 27% of its sugarcane. Combined with great improvements in productivity and cost-efficiency over the past decade, these natural assets make Brazil an agricultural powerhouse. The nation is also the world’s second-largest producer of biodiesel and ethanol.
- Digital Prowess. Brazil possesses advanced digital infrastructure and high connectivity. An estimated 95% of residents use the internet daily, according to the World Bank, enabling a high degree of digital participation. An estimated 70% of Brazilians use the Pix online instant payment system, for instance, just six years after the central bank launched it. Pix has democratized access to payments by enabling Brazilians to make transactions around the clock without incurring fees, and other Global South nations are considering it as a model payment system. After China and India, Brazil has the largest pool of low-cost software developers and other tech talent in the world. (See Exhibit 3.) Brazil has leveraged its digital savvy to create a thriving information and communications technology services industry. Exports from this sector account for 13% of Brazil’s total and have grown 15% annually over the past decade.
- A Dynamic Digital Startup Ecosystem. Brazil has emerged as Latin America’s leading innovation hub, with an active startup scene backed by a venture capitalists that mobilized $2 billion in 2024, a 17% increase from 2023. Despite lagging in basic R&D, Brazil ranks among the top 15 countries in the world in terms of startups and in the top 10 in unicorns—startups valued at $1 billion or more. It is particularly strong across the fintech value chain and other digital services. Several Brazilian unicorns are expanding in Latin America and beyond. These include Nubank, a digital platform that provides credit cards, consumer loans, and other financial services to more than 120 million customers throughout the region; Quinto Andar, a digital real-estate platform that has expanded across Latin America; and Wellhub, a corporate well-being platform that provides access to gyms, mental health care, and other services in North America, Europe, and Asia.
- A Diverse Manufacturing Sector. Brazil has some of the broadest manufacturing capabilities in the Global South. Most major global automakers produce vehicles locally. Embraer anchors a globally competitive aircraft industry. Brazil is also a major exporter of machinery, steel, and packaged foods. Although much of this manufacturing depth stems from import substitution policies dating back decades that promoted industrialization by favoring domestic production over imports, these policies laid the foundations for a robust installed base of competitive factories and an experienced, skilled workforce.
- Political Neutrality and Active Diplomacy. Brazil’s nonaligned stance has enabled it to avoid entanglement in geopolitical conflicts between foreign powers that constrain trade and investment. As a stable democracy, Brazil enjoys warm relations with most Western nations, despite recent tensions with the US. Its active role in BRICS+—a grouping that includes five longstanding members (Brazil, China, India, Russia, and South Africa) and five additional members that either joined in January 2024 or have been invited to join (Egypt, Ethiopia, Indonesia, Iran, and the UAE)—and in the Global South movement positions it strategically among the world’s fastest-growing economies. Indeed, Brazil has been in the global diplomatic spotlight over the past two years, hosting high-visibility events such as meetings of the G20 and B20 (a dialogue forum for businesses), a BRICS summit, and COP30. Brazil’s broad international engagement enables it to rebalance its trade relationships. Since 2019, for example, the share of Brazilian trade with China has risen from 24% to 26% and its share with Global South nations has increased from 28% to 30%. Embraer’s Gomes Neto also sees “enormous opportunities to boost intra-BRICS commerce, supply chains, logistics, and infrastructure investments.” Brazil’s trade with Global North economies, meanwhile, has dropped from 48% to 44% over the same period. Brazil’s competitiveness also means that it has access to alternative markets for exports such as coffee, soy, beef, and produce impacted by new US tariffs.
Six Opportunities to Leverage Brazilian Advantages
Brazil’s structural advantages create promising opportunities for the nation to boost its economic growth and become more globally competitive. Here are six attractive possibilities.
Opportunity 1: Create More Value from Biological Resources
Few nations can match Brazil’s potential to meet growing global demand for food. The country can enhance its position as the world’s leading exporter of soybeans, coffee, sugar, poultry, and beef by continuing to improve its agricultural productivity through new technologies and practices to improve crop resilience to adverse weather. Brazil can also expand its role as a global provider of processed foods and next-generation biofuels. Demand for the latter is growing as airlines, shipping companies, and others face mounting regulatory pressure to lower their greenhouse gas emissions.
Brazil can get much more value out of its biodiversity advantage, too. Anima Investimentos’s Passos maintains that the wealth of plants, animals, and microorganism in Brazilian forests and savannahs can be better tapped as sources for new foods, pharmaceuticals, cosmetics, and bioactive compounds. “We need to transform biodiversity into applied science and business, with clear innovation missions, results-oriented research, and frameworks that provide legal certainty, traceability, and long-term investment,” he says.
Dan Ioschpe, the high-level climate champion for COP30, maintains that the bioeconomy can be a major driver of wealth creation not only for companies but also for local communities. “We could start to have a forest GDP that we don’t have today,” says Ioschpe—who is also chairman of global automotive wheel manufacturer Iochpe-Maxion—by becoming “a source of revenue through sustainable by-products, remunerating local populations for preservation.”
There are also lucrative opportunities for Brazil to leverage its global leadership in carbon sequestration and nature-based solution projects. Examples include the regeneration of degraded forests and agro-forestry business models such as Natura’s palm oil program, which combines preservation with food production. Brazil can sell carbon credits from such projects on global markets.
Companies can also advance Brazil’s status as a global testing ground for systems that trace environmental sustainability, enhancing transparency and compliance with international standards, especially in bioeconomy management, waste management, and carbon markets. “There is no way these services will not be valued in the future,” says Natura’s Ferreira. “Countries that do not invest in solutions for environmental impact will face economic sustainability challenges.”
Opportunity 2: Accelerate Development of Critical Minerals
Brazil’s wealth of critical minerals should enable it to capture greater market share globally, especially during worldwide supply disruptions. Brazil can accelerate development of its reserves of graphite and rare earths. “We can’t just export raw materials,” says Luciana Ribeiro, managing partner of EB Capital. “We need to export technology and know-how. Regulation and finance are finally starting to align with our competitive advantages to make that possible.”
By expanding beyond mining into refining and downstream products, Brazil can become a more important supplier to high-tech and green-energy manufacturers that need to diversify their sources. It can also move up their value chain through investment in these areas. “Even though Brazil has some of the world’s biggest reserves of rare earths, it has not yet structured an industry capable of transforming this advantage into global leadership,” says Alberto Kuba, CEO of WEG Industries, one of the world’s largest producers of electric motors.
Opportunity 3: Become a Driver of the Global Energy Transition
Brazil’s renewable energy dominance gives the country an unparalleled competitive edge in global decarbonization efforts and provides a competitive foundation for scaling up domestic industries. “We have all the fundamentals to lead the next phase of the global energy transition,” says Ribeiro. “The challenge now is to make capital more accessible and deploy technologies at scale.”
Brazil is a potential hub for foreign manufacturers that want to lower their carbon footprint. For example, the country’s steel industry currently emits 37% less CO2 per ton than the global average, and its aluminum industry emits 60% less. “Brazil’s competitive, renewable, and cheap energy matrix should attract large-scale industrial investments,” predicts Ricardo Mussa, chair of the Sustainable Business COP and former CEO of the biofuel company Raízen.
Brazil can also become a low-cost destination for sustainable energy-intensive data centers. Already, tech companies have invested $2 billion in Brazilian data centers in 2025 alone. “Brazil combines clean energy, available space, and a rapidly expanding market,” says WEG’s Kuba. He notes that the capacity of new data centers in Brazil can reach hundreds of megawatts, compared with 20 to 50 megawatts a few years ago, an expansion that “shows the scale and speed of cloud demand in this country.” Kuba anticipates that the country’s installed capacity could quadruple, to around 2 gigawatts, by 2030.
Opportunity 4: Better Integrate into High Value-Added Supply Chains
Brazil can enlarge the scale and extend the global reach of its industries by leveraging its broad trade and diplomatic relationships, abundant resources, relatively low-cost labor pool, and huge consumer market. "There’s a real opportunity for Brazil to export more value-added products and move up the global value chain,” says Embraer’s Gomes Neto. “But to do that, we must become truly competitive, combining technological strength with cost efficiency."
Brazil can serve as an attractive, stable base for global companies seeking to diversify their global production and procurement footprints. Among the country’s many promising sectors are auto parts, aerospace, wind power components, and off-highway vehicles.
Opportunity 5: Develop Brazil as a Digital Innovation and Services Base
With its deep pool of infotech talent, digitally engaged population, and dynamic startup ecosystem, Brazil is poised for solid growth in new digital services. It can become a greater global hub for IT, engineering, R&D, financial, and other services, including for customers in the Western Hemisphere that require help keyed to their time zones. By leveraging advanced AI tools, Brazilian providers can address language barriers and enable their customers to improve efficiency dramatically. By improving its business environment, Brazil can also become an innovation hub for digital startups.
To fully capture the opportunities, Brazil can ensure that more people in its current and future workforce have appropriate digital skill sets. Its public and private sectors could boost investment in upskilling programs, and its school system could place greater emphasis on bringing science, technology, engineering, and mathematics education up to global standards.
Opportunity 6: Invest More Aggressively in Infrastructure
Infrastructure stands out as one of Brazil’s greatest opportunities to boost long-term productivity and competitiveness. Currently, Brazil spends only around 2% of its GDP on transportation, sanitation, electrical, and telecom infrastructure. “Although Brazil has great strengths—from natural resources to talent to legal stability—there’s still a lot to be done,” says CEO Beto Abreu of Suzano, one of the world’s leading pulp and paper manufacturers. “Yes, the infrastructure gap is big. However, it also presents big opportunities with attractive returns.”
There are signs that “we’re already seeing the ramp-up of an investment supercycle,” says CEO Miguel Setas of Motiva, a leading Brazilian infrastructure concession company. Infrastructure spending is on track to reach approximately $50 billion in 2025, representing a 13% annual increase since 2020, according to Brazil’s National Confederation of Industry. Setas says that infrastructure spending “could be closer to 4% of GDP, in line with other emerging economies.” Reaching that level would entail investing around $90 billion a year over the next decade, which would require new funding mechanisms and a greater role for private capital. Private participation has already expanded across multiple sectors, from highways and railways to airports, ports, sanitation, and energy transmission. The success of recent airport and road auctions demonstrates the appetite among domestic and international players for long-term infrastructure assets. But substantial room for expansion remains. Setas notes that less than 2% of Brazil’s roads operate under concessions. “The appetite is there,” he says. “But we need to make it easier for long-term investors to manage foreign exchange risk and navigate regulatory and legal complexities.”
Brazil has reached a historic inflection point. For the past few years, Brazil’s public and private sectors have concentrated on sustaining the nation’s economic recovery and grappling with the dramatic geopolitical, trade, and technological shifts that are reshaping the global landscape. Brazil can now focus on seizing the tremendous opportunities in this changing world, taking bold actions that require close collaboration between Brazil’s public and private sectors. By repositioning its economy and industries, Brazil can unlock its full potential to achieve higher long-term growth and assume a greater role on the global stage.
The authors would like to acknowledge the contributions of the following executives to this article:
Beto Abreu, CEO of Suzano
João Paulo Ferreira, CEO of Natura
Francisco Gomes Neto, CEO of Embraer
Dan Ioschpe, Chairman of Iochpe-Maxion, high-level climate champion for COP30
Alberto Kuba, CEO of WEG Industries.
Ricardo Mussa, chair of the Sustainable Business COP and former CEO of Raízen
Pedro Passos, CEO of Anima Investimentos
Luciana Ribeiro, managing partner of EB Capital
Miguel Setas, CEO of Motiva
