Brazil ended 2013 with a GDP growth of 2.3%, the second worst economic performance among the six countries of Latin America in this year’s BrandZ ranking. Brazil’s performance reflects the difficulties stemming from a scenario dominated by the international financial crisis and the increased volatility of the macroeconomic variables, including exchange and interest rates.
2013 saw a fluctuation in activity levels, combining
quarters of stability, with decrease and increase in GDP.
These fluctuations are strongly associated with industrial
production, which saw variations in output levels due to
stock adjustments caused by changes in monetary and
fiscal policies, and more restricted access to consumer
credit.
The unemployment rate in 2013 fell to an average 5.4%,
the lowest rate since 2003, when it first began to be
measured. However, this decrease was not due to job
creation but related to lower demand for employment in
December. Consumption expenditure of households grew
by 2.3% in 2013, the 10th consecutive year of growth in
this indicator, but the lowest growth since 2003. This
growth was supported last year by rising wages and the
supply of credit, but constrained by the increase in interest
rates. As a consequence, the inflation rate in 2013 was
5.91%, below the government’s target range.
Despite the Brazilian economy becoming more diverse
in recent years, the country is still dependent on exports
of iron ore, soybeans, other agricultural products and
raw materials – all of which have been affected by the
slowdown in the world economy, particularly in China.
The protests on the streets in Brazil, instigated in 2012
across the country with the population asking for better
public services (transportation, education, health, among
others), were strengthened in 2013. The protest in June
became known as “the 20 cents revolution”, when people
across the country contested the increases in public
transportation fares in the main cities. These protests
grew to include other issues such as the high corruption
in the government and police brutality used against some
demonstrators.
The expectations placed upon the country as hosts
of World Cup 2014 were partially achieved with some
investments in infrastructure, stadia and transportation
systems. The World Cup itself was successful (except for
us – Brazil 1 x 7 Germany!), without any of the previously
anticipated problems, and visitor perceptions were
positive.
Brands of consumer goods from the beer and food
categories, such as Skol, Brahma and Sadia, benefited
from the rise in purchasing power of the growing middle
class. Retail brands such as Ipiranga, Casas Bahia, Lojas
Americanas and Pão de Açúcar, increased brand values
substantially, with a clear brand positioning.
Financial Institutions suffered a big drop in brand value due
to the decrease of banking spreads, increased intervention
by the Brazilian Government and economic growth as a
whole. Banco do Brasil decreased 70% in brand value.
In the B2B category, Vale suffered from the decrease
in commodities prices, a reflection of the slowdown
of China’s economy. Petrobras also decreased in 44%,
partly due to government intervention and low cash flow
generation.
Finally, in the Services category, Telecom brands are facing
some problems in generating positive brand perception
in the face of the convergence value proposition. Airlines’
brand evaluation has been negatively impacted by
infrastructure problems, even though the World Cup has
brought some improvements to airports.
