World of Tooling – Spotlight Brazil and Mexico
Brazil/Mexico - Over the course of the entire year 2016, WBA Aachener Werkzeugbau Akademie presents spotlights of the most important international tooling markets. This edition focuses on Brazil and Mexico.
Brazil is the largest and most populated country in South America. It is home to about 203 million people, while UN estimates indicate that the population will grow to 223 million by 2050. The United Mexican States is a federal republic located in Central America with approximately 120 million citizens. Estimates of the UN suggest that the population will increase to 144 million by 2050. Brazil is an emerging nation and belongs to the so-called “BRICS nations”, an association of upcoming economies that includes Russia, India, China and South Africa. The country has made great progress with regard to the quality of life while reducing the enormous prevailing social imbalance and widespread poverty. More than 26 million Brazilians are said to have “escaped” acute poverty between 2003 and 2013. Nevertheless, Brazil continues to face significant social and political challenges, especially in comparison with highly developed industrial nations.
This applies to income distribution, the labour market, healthcare system, inner and social security as well as education. Only 45% of Brazilian adults and 37% of the adult population in Mexico have a higher educational degree. Still, Mexico invests the same share of its gross domestic product (GDP) in education as Germany (5.1%). Mexico has made remarkable progress in recent years, particularly in the improvement of living conditions and the educational system. The most significant change has been the reformation of the healthcare system and an overall booming economy. The average income of Brazilian and Mexican households is €7,732 and €8,034, respectively. Brazil is plagued by high crime rates and organised crime and belongs to the top-20 countries in terms of frequency of capital crimes per 100,000 citizens. Despite numerous problems, Brazilians are significantly more satisfied with their lives than citizens of many other industrialised nations.
The Brazilian economy and industry
Brazil's GDP is the ninth-largest national economy worldwide in 2015. The economy has had an average growth rate of 2% per year for the past four years. The GDP per capita was approximately €10,000 in 2015. By comparison, the German GDP per capita for the same period was €42,500. Brazilian growth rates fell by an average of over two percentage points compared with the period, 2006-2010. The economic outlook for 2016 is moderately positive, with an expected growth of 2.0%. Brazil is currently the world’s 11th-largest export and 21st-largest import nation. In 2012, the country exported goods worth €228bn. The most important exports were resources (iron ore and crude oil) and products related to the food and automotive industries. The country has large deposits of raw materials, including tin, iron ore, gold, aluminium and uranium. The level of wages was close to €14,500 in 2013 and is below the average of all industrial nations. The unemployment rate of 6.9% is close to historical lows. Brazil continues to be a volatile country with great potential, although major risks for investors exist in terms of currency security, corruption and the administrative system. In particular, trade regulations affecting import and export customs complicate the activities of foreign market participants. The complex customs regulations, abrupt and temporary tax increases on certain goods in the name of protection of local economies lead to an unstable foreign trade.