However, the demand that fueled past growth is changing. Consumption expansion is expected to lose steam as Brazil closes penetration gaps with developed economies in several categories, as well as in consumer-credit stock levels. A sluggish global economy will weaken demand for Brazilian commodities.
On the supply side, productivity has emerged as the key challenge for Brazil and companies operating in Brazil. Our analysis shows that approximately 74 percent of the GDP growth over the past decade was due to the increase in the number of people working and only about 26 percent was attributable to productivity gains. This is very different from the productivity-driven growth of other rapidly developing economies. As the workforce expansion weakens, it will be critical for Brazil to increase productivity significantly to meet its aspiration of growing GDP by more than 4 percent per year.
To prosper in this new environment, companies must look for new ways to create shareholder value that are less dependent on growth. The right strategy will be different for each company. However, adjusting business portfolios and improving productivity will be important value drivers in most cases.
The next decade in Brazil will impose new challenges but also offer high rewards. What worked in the past may not be a recipe for the future. Companies able to meet these challenges"”particularly by boosting productivity"”will be well positioned to serve Brazil's sizable domestic market, take advantage of the country's advantaged position in natural resources, and continue to create value.
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Keywords: international trade, marketing to Brazil, Brazilian consumer markets, labor force in Brazil
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