Brazil's Economy

pril 2007, it was raised again to R$380 per month, from R$350.

Brazil's infrastructure suffers from serious under-investment: many existing homes lack basic services, with only 65% having access to sewage systems and 15% without running water. Less than 30% of Brazil's extensive road network (72,000 kilometres) is in adequate condition, whilst trains are unreliable.

In 2007, President Lula launched the growth-accelerating programme (PAC), which aimed to invest in infrastructure, energy generation, housing and water improvement. The plan should have positive consequences for both consumers and businesses, although it makes no provision for a much needed major tax reform.

With interest rates having come down, Brazil saw a significant number of company flotations take place on the stock exchange (Bovespa) in 2007, and is beginning to attract a larger amount of foreign direct investment (FDI), especially in the services sector. This should boost employment and therefore consumer spending.

Growth in Brazil's economy is highly unequal geographically, with much of economic growth driven by the central and southern regions. Opportunities for job and wage growth are concentrated in these areas, resulting in an uneven distribution of consumer spending across Brazil.

Much of Brazil's territory includes the inaccessible Amazon rainforest in the north and centre, which has only basic infrastructure and a small population. However, the northeast region is currently undergoing a growth spurt, as its people benefit from the wealth distribution programmes, such as Bolsa Família (Family Grant), along with increased foreign tourism and investment.

The "informal market" is often cited as a major obstacle to economic growth in Brazil. There are currently thought to be around 11 million informal businesses operating in the country, which do not pay taxes and employ unregistered workers.