BRAZIL

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With a GDP of USD 4.7 trillion in 2023, Brazil is the 7th largest economy in the world. It accounts for one third of Latin America and the Caribbean’s GDP (PPP) and with 216 million inhabitants, it represents one third of the region’s total population. It is also the 5th largest country in the world and hosts 20% of the world’s rainforest. The country has abundant natural resources, the economy is well-diversified and enjoys a well-supervised and robust financial system. Brazil is weakly integrated into the global economy and also suffers from a significant infrastructure gap, high income inequality, a complex tax system, a rigid labour market and weak governance. At a macro level, Brazil has a good capacity to honour payments in foreign currencies thanks to large foreign currency (FX) reserves, diversified FX generating activities, a strong ability to attract foreign investment and a moderate external debt burden.

Brazil’s growth profile over the past decade has been relatively volatile. While the economy has averaged a 4.5% growth over period 2007-2011, economic activity since 2013 has mostly alternated between periods of relative stagnation (2014 2017, 2018, 2019) and contraction (2015, 2016, 2020). The subdued growth trajectory of recent years can be traced back to a combination of factors, including policy missteps, a less supportive external environment marked by the end of the commodity super-cycle in 2014, and a string of political and industrial corruption scandals that have impacted household and investor confidence. It is also the product of a structurally low investment rate, which has further weakened in recent years. Fiscal rigidities have impeded public investment growth, while record high lending rates (and a lack of access to long-term credit) as well as high administrative burdens and reduced access to subsidized credit have strained private investment.

Since 2023, Lula’s administration has focused on restabilising the Brazilian economy. It has been shaped by a complex economic environment. Upon taking office, Lula inherited a challenging economic situation: high inflation, though a downward trend (about 5.79% in 2022), high interest rates (the SELIC rate was 13.75%), persistent fiscal deficits, and rising public debt (around 73% of GDP). The social inequalities had been exacerbated by the pandemic and the economic crises of the previous years posed significant hurdles.

The BRL has experienced significant volatility in current terms, driven by both global and domestic factors. Initially, concerns over fiscal discipline and political uncertainties led to depreciation pressures. External dynamics, including fluctuating commodity prices and global monetary tightening, have also influenced the currency. Since November '23, the BRL has devalued by 18% (1 BRL = 5.90 USD in November 2024). While the BRL has occasionally strengthened, ongoing fiscal risks and high domestic interest rates continue to weigh on investor confidence, keeping the exchange rate unstable.

Summary

BNP Paribas has been present in Brazil since 1950, with a business centre in Sao Paulo, providing corporate solutions for corporate clients. The bank offers comprehensive domestic and international cash management and trade finance solutions, including access to the local clearing house. These services include local payment products (Boletos, TED, Pix - Instant Payments, tax & utility), collection (issuance of boleto), investment options (CDB, Repo, Investment Sweep), intraday, overdraft,), e-banking (Connexis) and specialist capabilities in escrow accounts to manage funds related to acquisition and commercial agreements. The combination of solutions and dedicated customer services offer a highly competitive alternative to local banking services for multinational corporations doing business in Brazil, and Brazilian companies seeking expansion overseas.

Currency

Brazilian real (BRL)

Bank accounts

  • A company is considered resident in Brazil if it is incorporated in Brazil.
  • On certain occasions, non-residents may be treated as residents because their branches, local agents or representative offices operate in Brazil.

BNP Paribas Cash Management Capabilities

Cash collections
Cheque collections
Direct debit collections
Domestic incoming transfers
Virtual IBAN
Virtual accounts
International incoming transfers
Card acquiring

Payments & collections

In Brazil, Pix - Brazil Instant Payment transactions has become the most used payment method for low value retail transactions, followed by credit cards and debit cards. The use of digital wallets, such as PayPal, PicPay and Mercado Pago, gathered with the payments institutions is also rising.

In November 2020, the Banco Central do Brasil launched PIX, an instant payments scheme. The settlement infrastructure, called the Instant Payment System (SPI), is available 24 hours a day, seven days a week, via mobile devices, online banking or ATMs. PIX allows payments to be made via aliases.

Electronic banking services are available from all banks. There is no national electronic banking system in Brazil, so companies use banks’ proprietary services.

Transaction and balance reporting, and transaction initiation services are available.

Many companies operating in Brazil exchange data electronically with banking and commercial counterparties via VANs (value-added networks) and EDI protocols.

The number of  transactions performed by bank accounts with internet banking access in Brazil increased by 38% to 82.7 billions from Q2 2023 to Q2 2024. 93% of this number is from mobile banking. Mobile banking has become Brazil’s preferred channel for banking operations. 

Short term investments

Interest payable on credit balances

  • Interest-bearing current accounts are not permitted.

Demand deposits

  • Demand deposit accounts do not receive interest payments. Funds can be withdrawn without notice. Cheques and electronic transfers can be used with demand deposit accounts.

Time deposits

  • Time deposits such as CDB (Certificado de Depósito Bancário) are available in BRL and are generally issued for investments over 30 days due to tax applied up to 30 days.

Treasury (government) bonds

  • The National Treasury auctions discounted Treasury bonds (letras do tesouro nacional - LTNs, letras financeiras do tesouro - LFTs and notas do tesouro nacional - NTN-C) on a daily basis.

Commercial paper

Repurchase agreements

  • Repurchased agreements (repo's) are available in Brazil.

Bank guarantee

  • Bank guarantees are not used in Brazil.

BNP Paribas Trade Finance Capabilities

Documentary credits
Documentary collections

International trade

  • As a member of the Mercosur (Mercado Común del Sur – Southern Cone Common Market) regional common market, Brazil applies Mercosur customs policies and regulations.