Brazil
A new report examines how artificial intelligence could raise productivity while reshaping work across the region, and recommends building firms’ capabilities, expanding short-cycle and technical training, and modernizing digital government and data systems. It also highlights the potential of “small AI,” that are already showing promise in areas from education and telemedicine, could also be a powerful tool for small and medium enterprises, farmers, among others.
BY THE NUMBERS: BRAZIL
OVERVIEW: BRAZIL
Home to 212.8 million people and with a real GDP per capita of $10,716 (2025), Brazil is the largest country in Latin America. Despite its size and diversity, racial and gender inequalities continue to limit opportunities and keep many families in poverty.
Brazil spans 8.5 million km², with sharp regional contrasts. According to the Human Capital Index (HCI), a child born in Brazil today will achieve only 55% of their potential productivity with full access to health and education. Factoring in unemployment, this falls to 33%. Inequalities are especially stark: Afro-Brazilians, Indigenous peoples, and women face significant barriers, while HCI scores range from around 40% in the North and Northeast to 70% — comparable to OECD countries — in the wealthier Southeast.
Brazil’s natural resources position it to benefit from the global shift to low-carbon economies. Yet three-quarters of its greenhouse gas emissions come from land-use change and agriculture. Halting deforestation and scaling up climate-smart farming are urgent. The Amazon is approaching an ecological tipping point, threatening rainfall, agriculture, hydropower, and water supply across the region. Protection efforts must also cover other vital biomes such as the Cerrado.
Agriculture can be a driver of this transition by reducing deforestation, expanding sustainable land use, and boosting productivity. Brazil’s largely low-carbon energy mix also creates opportunities to cut emissions in transport, industry, and cities at relatively low cost.
The government’s Ecological Transformation Plan (ETP) and recent reforms aim to advance inclusive, sustainable growth, with a target of zero illegal deforestation by 2030. Reaching these goals will require coordinated action across sectors and levels of government, laying the foundation for long-term prosperity.
Last Updated: October 6th, 2026
Brazil has shown resilience, averaging 3 percent growth since 2022, driven by a strong labor market and private consumption. However, low productivity and fiscal imbalance limit faster growth. Social gains are notable: the bottom 40 percent saw income grow 4.8 percent annually (2019–2024). Yet inequality remains high: the bottom 10 percent earn 4 percent of total income, against 55 percent for the top 10 percent.
The primary macroeconomic challenge is fiscal imbalance. Public debt is elevated and financed through high interest rates, which, combined with budget rigidity and expenditure indexation, sharply limit fiscal space. Decisive fiscal adjustment is required to improve debt dynamics, anchor inflation expectations, sustain the monetary easing cycle, and lower the cost of capital, thereby supporting investment.
Furthermore, the "Custo Brasil" (tax burden and complexity, regulatory barriers, credit-market distortions, and obstacles to long-term financing) weighs on private investment and growth prospects. The 2023 VAT reform, which simplified the complex tax system, was a positive step. However, reforms to enhance the business environment, foster gradual trade openness, strengthen the quality of education, and address infrastructure gaps are also needed to boost potential growth and reduce poverty and inequality.
Real GDP grew by 2.3% in 2025 and is projected to moderate to 2.1% in 2026 as still-high interest rates dampen investment, while private consumption grows more slowly amid a cooling labor market and rising household debt. Growth is expected to ease further to 1.7 percent in 2027 amid tighter credit conditions and uneven El Niño-related disruptions to agriculture and energy, but recover to 2.3 percent over the medium term as the indirect tax reform and broader structural reforms lift productivity. After a rise in 2026, inflation is expected to decline to 4.0 percent by 2028, aligned with anchored expectations. Poverty reduction is projected to stall in 2026, as labor-market gains moderate, with the poverty rate reaching 19 percent before falling to 18.4 percent by 2028.
The 2026 primary deficit is projected at 0.5 percent, turning into a surplus by 2028 as the fiscal framework's expenditure cap anchors consolidation. Yet, public debt is projected to rise to 90.7 percent of GDP by 2028, amid elevated financing costs, before stabilizing over the medium term.
Brazil maintains solid macroeconomic buffers, including ample international reserves, low external debt, a credible Central Bank, and exchange rate flexibility.
Last Updated: October 6th, 2026
Progress in Brazil has global significance, as improvements in living conditions within the country can positively impact the world, and vice versa. The World Bank Group is dedicated to supporting Brazil’s efforts to accelerate productivity growth and reduce poverty and inequality, all within a framework of fiscal and environmental sustainability. This commitment aims to build a future with opportunities for all and to help Brazil realize its potential as a leader in green and climate-friendly development.
Demand for World Bank Group support in Brazil is substantial. The International Bank for Reconstruction and Development (IBRD) currently manages a portfolio of 64 projects, totaling $13.66 billion in commitments. This includes 51 investment projects ($8.24 billion), 10 development policy operations ($4.92 billion), and three program-for-results operations ($498.3 million).
Requests for IBRD financing from states, municipalities, and federal entities, including federal public banks, often surpass the volume of federal guarantees allocated by the Union to international financial institutions (IFIs), which are necessary to enable lending. This strong demand, combined with Brazil’s diverse development challenges, calls for innovative programming and a more ambitious approach to the World Bank Group’s joint efforts to mobilize private capital and improve markets.
The IFC support for the private sector—through loans, equity investments, and advisory services for project structuring—has increased year after year, contributing to economic growth and job creation in Brazil. IFC committed $11.6 billion in new investments in the country during the fiscal year ending in June 2025, including both its own resources and funds mobilized from third parties. With an investment portfolio totaling $7.1 billion in FY25, Brazil now represents IFC’s second largest investment portfolio worldwide.
MIGA has significantly deepened its engagement in Brazil over the last two years. By partnering with state-owned banks to deploy credit-enhancement and trade finance guarantees, MIGA is supporting private international financing in areas that promote inclusive growth, such as micro and small sustainable agriculture producers, renewable energy and equipment for the agricultural sector. As of September 2026, MIGA's total gross exposure in Brazil stands at USD 1.7 billion.
Last Updated: October 6th, 2026
The World Bank Group’s Country Partnership Framework (CPF) for Brazil for FY2024–2028 is designed to help Brazil build a more productive, inclusive, and sustainable economy.
The CPF is closely aligned with Brazil’s Federal Government’s 2024–2027 Multi-Year Plan (PPA) and the Ecological Transformation Plan (ETP). It focuses on three main outcomes: greater productivity and employment, greater inclusion of poor and underserved populations, and a greener economy with reduced vulnerability to climate shocks.
Key priorities include fiscal consolidation, improving government effectiveness, and regulatory reforms to lower transaction costs and boost competitiveness. The CPF supports inclusive and sustainable development, better management of natural resources, expansion of clean energy, and the development of green and resilient cities.
It also emphasizes strengthening social protection and education for disadvantaged groups, advancing institutional reforms, promoting transparency, and fighting corruption. Mobilizing private capital is a central goal, with IFC and MIGA playing key roles. The CPF encourages close collaboration with development partners.
The previous CPF, covering FY2018–2023, was significantly adjusted in the 2022 Performance and Learning Review to respond to the COVID-19 pandemic.
Last Updated: October 6th, 2026
In the area of People, the World Bank has supported Bolsa Família, which lifted millions out of poverty and set benchmarks for transparency and crisis response. It has contributed to education reforms in Ceará, inspiring changes nationwide, and supported the Unified Health System (SUS), recognized as one of the world’s most advanced public health systems. The Bank has also promoted opportunities for indigenous peoples (https://dgmbrasil.org.br/), Afro-Brazilians, women, and youth, advancing legislation on social responsibility, violence prevention, and reducing disparities.
For Prosperity, the World Bank Group backed Brazil’s first public-private partnership (PPP) in São Paulo Metro Line 4 and has since supported a PPP program that unlocked $8.5 billion in private investment over a decade, improving urban mobility and services. Its analytical work and technical assistance have helped advance fiscal and structural reforms, including the 2019 pension reform, the state borrowing capacity classification (CAPAG), and indirect tax reform. Initiatives like the Progestão series support fiscal efficiency and management reforms in various states and cities.
On the Planet pillar, since the 1990s, the World Bank has supported Amazon land demarcation, community reserves, certified forest management, and institutional strengthening. It has led efforts in the Cerrado and Caatinga biomes for sustainable water, agriculture, and land management. The IFC pioneered sustainable finance instruments, such as the first sustainability-linked and blue loans, social bonds, and zero-deforestation loans. In 2023, Brazil issued its first sovereign sustainability bond, supported by the World Bank Group and IDB, opening new opportunities for sustainable financing.
The World Bank Group will continue to prioritize high-impact engagements that go beyond the scale of its financing, supporting Brazil’s development across these pillars.
Last Updated: October 6th, 2026
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