The service sector is the largest component of GDP at 66.8 percent, followed by the industrial sector at 29.7 percent (2007 est.). Agriculture represents 3.5 percent of GDP (2008 est.). Brazilian labor force is estimated at 100.77 million of which 10 percent is occupied in agriculture, 19 percent in the industry sector and 71 percent in the service sector.

Agriculture

Brazil is endowed with vast agricultural resources. There are two distinct agricultural areas. The first, composed of the southern one-half to two-thirds of the country, has a semi-temperate climate and higher rainfall, the better soils, higher technology and input use, adequate infrastructure, and more experienced farmers. It produces most of Brazil’s grains and oil seeds and export crops. The other, located in the drought-ridden northeast region and in the Amazon basin, lacks well-distributed rainfall, good soil, adequate infrastructure, and sufficient development capital.

Although mostly occupied by subsistence farmers, the latter regions are increasingly important as exporters of forest products, cocoa, and tropical fruits. Central Brazil contains substantial areas of grassland with only scattered trees. The Brazilian grasslands are less fertile than those of North America and are generally more suited for grazing. This leads to the first region to have a better economy, and they can sell all of their crops for money for their people. The second region would have a hard time with this because they would not have as many crops to sell. That is how this kind of agriculture can affect Brazil.

The history of agriculture in Brazil in the colonial period and beyond is intertwined with the history of slavery in Brazil. Since the abolition of slavery in 1888 by the Lei Áurea (“Golden Law”), the practice of forced labour (trabalho escravo) has remained commonplace in agriculture.

During the dictatorship period, agriculture was neglected and exploited as a means of resources for the industry sector and cheap food for the urban population. Until late 1980s export and prices were controlled, with quotas on exports. This has changed since the early 1990s.

Brazilian agriculture is well diversified, and the country is largely self-sufficient in food. Agriculture accounts for 8% of the country’s GDP, and employs about one-quarter of the labour force in more than 6 million agricultural enterprises. Brazil is the world’s largest producer of sugarcane and coffee, and a net exporter of cocoa, soybeans, orange juice, tobacco, forest products, and other tropical fruits and nuts.

Livestock production is important in many parts of the country, with rapid growth in the poultry, pork, and milk industries reflecting changes in consumer tastes. On a value basis, production is 60% field crop and 40% livestock. Brazil is a net exporter of agricultural and food products, which account for about 35% of the country’s exports.

Half of Brazil is covered by forests, with the largest rain forest in the world located in the Amazon Basin. Recent migrations into the Amazon and large scale burning of forest areas have placed the international spotlight on the country and damaged Brazil’s image. The government has reduced incentives for such activity and is beginning to implement an ambitious environmental plan – and has just adopted an Environmental Crimes Law that requires serious penalties for infractions.

Brazil is a large exporter of coffee, soybeans, beef, sugar cane, ethanol and frozen chickens. Other agricultural products include: wheat, rice, corn, cocoa, and citrus.

Industry

Most large industry is concentrated in the south and south east. The north east is traditionally the poorest part of Brazil, but it is beginning to attract new investment.

Brazil has the third most advanced industrial sector in The Americas. Accounting for one-third of GDP, Brazil’s diverse industries range from automobiles, steel and petrochemicals to computers, aircraft, and consumer durables.

With the increased economic stability provided by the Plano Real, Brazilian and multinational businesses have invested heavily in new equipment and technology, a large proportion of which has been purchased from U.S. firms.

Brazil has a diverse and sophisticated services industry as well. During the early 1990s, the banking sector accounted for as much as 16% of GDP. Although undergoing a major overhaul, Brazil’s financial services industry provides local businesses with a wide range of products and is attracting numerous new entrants, including U.S. financial firms.

The São Paulo and Rio de Janeiro stock exchanges are undergoing a consolidation and the reinsurance sector is about to be privatized.

The Brazilian government has undertaken an ambitious program to reduce dependence on imported oil. Imports previously accounted for more than 70% of the country’s oil needs but in 2006 Brazil has achieved oil self sufficiency.

Brazil is one of the world’s leading producers of hydroelectric power, with a current capacity of about 58,000 megawatts. Existing hydroelectric power provides 92% of the nation’s electricity. Two large hydroelectric projects, the 12,600 megawatt Itaipu Dam on the Paraná River — the world’s largest dam—and the Tucurui Dam in Para in northern Brazil, are in operation.

Brazil’s first commercial nuclear reactor, Angra I, located near Rio de Janeiro, has been in operation for more than 10 years. Angra II is under construction and, after years of delays, is about to come on line. An Angra III is planned. The three reactors would have combined capacity of 3,000 megawatts when completed.

Proven mineral resources are extensive. Large iron and manganese reserves are important sources of industrial raw materials and export earnings. Deposits of nickel, tin, chromite, bauxite, beryllium, copper, lead, tungsten, zinc, gold, and other minerals are exploited. High-quality coking-grade coal required in the steel industry is in short supply.

Energy

Brazil is the 10th largest energy consumer in the world and the largest in South America. At the same time, it is an important oil and gas producer in the region and the world’s second largest ethanol fuel producer.

The governmental agencies responsible for energy policy are the Ministry of Mines and Energy (MME), the National Council for Energy Policy (CNPE, in the Portuguese-language acronym), the National Agency of Petroleum, Natural Gas and Biofuels (ANP) and the National Agency of Electricity (ANEEL).

State-owned companies Petrobras and Eletrobrás are the major players in Brazil’s energy sector, as well as Latin America’s.

At the end of the 1990s and the beginning of the 2000s, Brazil’s energy sector underwent market liberalization. In 1997, the Petroleum Investment Law was adopted, establishing a legal and regulatory framework, and liberalizing oil production.

The key objectives of the law were the creation of the CNPE and the ANP, increased use of natural gas, increased competition in the energy market, and investments in power generation.

The state monopoly of oil and gas exploration was ended, and energy subsidies were reduced. However, the government retained monopoly control of key energy complexes and administered the price of certain energy products.

Current government policies concentrate mainly on the improvement of energy efficiency, in both residential and industrial sectors, as well as increasing renewable energy. Further restructuring of the energy sector will be one of the key issues for ensuring sufficient energy investments to meet the rising need for fuel and electricity.

See Also: Energy | Economy of Brazil

Tourism

Tourism in Brazil is a growing sector and key to the economy of several regions of the country. The country had 4.8 million visitors in 2009, the main destination in South America, and second in Latin America after Mexico, in terms of international tourist arrivals.

In terms of 2008 Travel and Tourism Competitiveness Index (TTCI), which is a measurement of the factors that make it attractive to develop business in the travel and tourism industry of individual countries, Brazil reached the 49th place in the world’s ranking, second among Latin American countries, and sixth in the Americas.

International Tourism

According to the World Tourism Organization (WTO), international travel to Brazil began to grow fast since 2000, particularly during 2004 and 2005. However, in 2006 a slow down took place, and international arrivals have had almost no growth both in 2007 and 2008.

In spite of this trend, revenues from international tourism continue to rise, from USD 3.9 billion in 2005 to USD 4.9 billion in 2007, a one billion dollar increase despite 333 thousand less arrivals. This favorable trend is the result of the strong devaluation of the American dollar against the Brazilian Real, which began in 2004, but on the other hand, making Brazil a more expensive international destination. This trend changed in 2009, when both visitors and revenues fell as a result of the 2008-2009 economic crisis.

Despite continuing record breaking of international tourism revenues, the number of Brazilian tourists travelling overseas has been growing steadily since 2003, resulting in a net negative foreign exchange balance, as more money is spent abroad by Brazilian than receipts from international tourist visiting Brazil.

Tourism expenditures abroad grew from USD 5.76 billion in 2006, to USD 8.21 billion in 2007, a 42,45% increase, representing a net deficit of USD 3.26 billion in 2007, as compared to USD 1.45 billion in 2006, a 125% increase from the previous year. This trend is caused by Brazilians taking advantage of the stronger Real to travel and making relatively cheaper expenditures abroad. Brazilian traveling overseas in 2006 represented 3.9% of the country’s population.

In 2005, tourism contributed with 3.2% of the country’s revenues from exports of goods and services, and represented 7% of direct and indirect employment in the Brazilian economy. In 2006 direct employment in the sector reached 1.87 million people.

In 2005, Rio de Janeiro, Foz do Iguaçu, São Paulo, Florianópolis and Salvador were the most visited cities by international tourists for leisure trips. The most popular destinations for business trips were São Paulo, Rio de Janeiro and Porto Alegre. In 2006 Rio de Janeiro and Fortaleza were the most popular destinations by national visitors.

Domestic Tourism

Domestic tourism is a key market segment for the tourism industry in Brazil. In 2005, 51 million Brazilian nationals made ten times more trips than foreign tourists and spent five times more money than their international counterparts. The main destination states in 2005 were São Paulo (27.7%), Minas Gerais (10.8%), Rio de Janeiro (8.4%), Bahia (7.4%) and Santa Catarina (7.2%). The top three states by trip origin were São Paulo (35.7%), Minas Gerais (13.6%) and Rio de Janeiro (8.2%).

In terms of tourism revenues, the top earners by state were São Paulo (16.4%) and Bahia (11.7%). For 2005 the three main trip purposes were visiting friends and family (53.1%), sun and beach (40.8%), and cultural tourism (12.5%).

Most international visitors in 2008 came from Argentina (20.2%), from the United States (12.4%) and from Italy (5.3%), while as a region most visitors came from neighboring South American countries, mainly from Mercosul.

See Also: Travel in Brazil