BRAZIL

Economic Freedom Score

25

World Rank:

122

Regional Rank:

21

Least
free 0

razils limited experiment with market-oriented reforms

Bstates
has been uneven and even derailed in some areas. The
presence in such sectors as energy, financial services,

50

75
Most

100 free

56.5

Freedom Trend
59

and electricity remains extensive. The legacy of decades

of central planning, state meddling in economic activity
continues even where it has demonstrably failed, and the
weak rule of law further undermines economic progress.
ECONOMIC FREEDOM SNAPSHOT
2016 Economic Freedom Score: 56.5 (down 0.1 point)
Economic Freedom Status: Mostly Unfree
Global Ranking: 122nd
Regional Ranking: 21st in the South and Central America/
Caribbean Region
Notable Successes: Trade Freedom
Concerns: Corruption, Management of Public Finance, and
Regulatory Efficiency
Overall Score Change Since 2012: 1.4
The onerous regulatory environment hinders needed economic transformation and undercuts realization of the
economys full potential. Growing public debt and higher
debt service costs have kept fiscal pressure high, and burdensome taxes further crowd out private-sector growth.
BACKGROUND: President Dilma Rousseff of the leftist Workers Party began her second term in January 2015. A recession, fiscal and monetary belt-tightening, and a far-reaching
kickback scheme involving her party and the state-controlled
Petrleo Brasileiro oil company sent her approval rating plummeting. Brazil has poor public services, antiquated and insufficient infrastructure, and high tax rates. In recent years,
inflation has surged again. Growth is sluggish, but Brazils
Bolsa Famlia conditional cash transfer program for the poor
has won support in some sectors. Brazil is the worlds seventhlargest economy, and its population of almost 200 million is
heavily concentrated on the Atlantic coast. Since the advent
of the monetary real plan in the 1990s and the end of hyperinflation, the poverty rate has dropped, but heavy government
intervention in the economy continues to limit development.
How Do We Measure Economic Freedom?

See page 467 for an explanation of the methodology

or visit the Index Web site at heritage.org/index.

58

57

56

55

2012

2013

2014

2015

2016

Country Comparisons
56.5

Country
World
Average

60.7

Regional
Average

59.8

Free
Economies

83.9
0

20

40

60

80

100

Quick Facts
Population: 202.8 million
GDP (PPP): $3.3 trillion
0.1% growth in 2014
5-year compound annual growth 3.2%
$16,096 per capita
Unemployment: 6.8%
Inflation (CPI): 6.3%
FDI Inflow: $62.5 billion
Public Debt: 65.2% of GDP
2014 data unless otherwise noted.
Data compiled as of September 2015.

129

BRAZIL (continued)
THE TEN ECONOMIC FREEDOMS
Score

RULE OF
LAW

Property Rights
Freedom from Corruption

Country

World Average

45.0
43.0
0

20

40

60

80

Rank

1Year
Change

65th
71st

5.0
+1.0

100

Graft remains endemic, and Brazilians disapprove of President Dilma Rousseffs policies on
corruption and crime. In 2014, a former director of state-owned Petrobas accused more than
40 politicians, including one minister and three governors, in a massive kickback investigation. Brazils judiciary is inefficient and subject to political and economic influence. The court
system is overburdened, and contract disputes can be lengthy and complex.
Fiscal Freedom 69.7
GOVERNMENT
Government Spending 55.2
SIZE

141st
129th
0

20

40

60

80

+1.3
+4.3

100

The income tax rate is 27.5 percent. The standard corporate tax rate is 15 percent, but a financial transactions tax, 10 percent surtax, and 9 percent social contribution on net profits bring
the effective rate to 34 percent. The overall tax burden amounts to 33.4 percent of GDP. Public
spending equals over one-third of GDP, and fiscal stimulus efforts have increased chronic deficits. Public debt equals about 65 percent of GDP.

REGULATORY
EFFICIENCY

Business Freedom
Labor Freedom
Monetary Freedom

61.4
52.5
64.2

109th
125th
172nd
0

20

40

60

80

+7.8
+0.4
5.2

100

Bureaucratic hurdles remain common, including lengthy processes for launching a business
and obtaining permits. The non-salary cost of employing a worker adds to the cost of doing
business, and labor regulations remain stringent. In 2015, surging state-administered prices
for gasoline, electricity, and transportall heavily subsidized before the 2014 presidential electioncaused inflation to reach its highest level in over a decade.

OPEN
MARKETS

Trade Freedom
Investment Freedom
Financial Freedom

69.4
55.0
50.0

134th
102nd
72nd
0

20

40

60

80

0.2
+5.0
10.0

100

Brazils average tariff rate is 7.8 percent. Brazilians may not import used consumer goods
like cars and clothing. Government procurement policies favor domestic companies. Foreign
investment in agricultural land is restricted. Brazil has the regions largest financial services
market. The states role in credit markets has grown since 2008, and public banks now account
for over 50 percent of loans to the private sector.

Long-Term Score Change (since 1995)

GOVERNMENT
SIZE

RULE OF LAW
Property Rights
Freedom from
Corruption

130

5.0
7.0

Fiscal Freedom
Government
Spending

7.0
19.2

REGULATORY
EFFICIENCY

OPEN MARKETS

Business Freedom
+6.4
Labor Freedom
12.1
Monetary Freedom +64.2

Trade Freedom
+13.0
Investment Freedom +5.0
Financial Freedom
0

2016 Index of Economic Freedom