Dear Friends,
On my recent visit to Rio de Janeiro, locals were bundled up in scarves and winter boots, as the temperatures hovered around 70° Fahrenheit (20° Celsius). The political temperature is also wintry, with the twists and turns of the largest corruption scandal in the country’s history producing new headlines almost daily.
Michel Temer, Brazil’s current President, is at the center of the stormy political environment. Coming off the heels of an indictment for corruption in mid-July, a new poll shows President Temer’s already abysmal popularity ratings have hit a new low as corruption allegations continue to swirl around him and others in government. Just 5% of respondents in the Instituto Ibope survey released on July 27th approved of Temer’s job performance, while 70% gave him either bad or terrible ratings.
Despite this, the economy has begun to rebound from the depths of Brazil’s most severe recession in modern history. The austerity policies of Temer’s government, who still has allies in Congress, have begun to bring interest rates down and spur economic growth, albeit at the expense of labor dislocation and current high unemployment, which has contributed to his unpopularity.
Much of the economic activity of this vast country is concentrated in the major metropolitan areas in the southeast region. Although over half the nation is covered by the Amazon rainforest, the vast majority of the population lives in sprawling urban areas that are the economic engine of the country. Though burdened with complex tax and labor laws, the country has dramatically improved its poverty levels in recent years, and the healthcare industry has continued to experience rapid growth.
Sao Paulo and Rio de Janeiro, with a combined population of 18 million, produce a total of 44% of the nation’s $2.3 trillion GDP while the other 25 states produce the rest.
Although the overall Brazilian economy is undergoing a transition, the healthcare industry is well-positioned for growth. In 2014, healthcare represented 8.3% of Brazil’s GDP, growing at an annualized rate of 2.9% over the last decade. This growth has enabled Brazil to have above average healthcare spending as a percentage of GDP compared to BRICS as well as other South American countries.