Brazil Has Almost Everything. So Why Isn’t It Richer?

Brazil has spent decades being described as the country of the future.

At some point, that description stops being a compliment.

It becomes an accusation.

Because Brazil does not suffer from an obvious shortage of economic advantages.

It has land.

Water.

Oil.

Iron ore.

Agriculture.

Hydroelectric power.

Wind.

Solar.

A continental domestic market.

A sophisticated banking system.

One of the world’s most successful instant-payment infrastructures.

A major industrial base.

An enormous food-exporting industry.

Access to both Western and Chinese markets.

No major geopolitical enemy on its borders.

And a population of more than 200 million people.

If an economist were allowed to design an emerging-market superpower from scratch, much of the Brazilian starting package would look extraordinarily attractive.

And yet the IMF’s latest assessment expects Brazilian growth to settle at only about:

2.5% in the medium term.

That is the Brazilian paradox.

Brazil does not lack potential. It has accumulated potential for decades. What it lacks is the ability to convert extraordinary advantages into extraordinary productivity.

And that is a much more serious problem than the usual discussion about whether Brazil will grow 2.1%, 2.4% or 2.7% next year.

A Superpower Growing Like a Mature Economy

The IMF expects Brazil to grow approximately 2.4% in 2026, helped partly by favourable terms of trade, fiscal support and higher oil prices.

Over the medium term, growth is expected to settle around 2.5%.

Think about that number.

India is still trying to build much of the infrastructure Brazil already possesses.

China has to import enormous quantities of the commodities Brazil produces.

Europe worries about energy security.

Brazil is a net oil exporter and obtains a large share of its electricity from renewable sources.

Countries around the world worry about food security.

Brazil is an agricultural superpower.

The global economy is fighting for strategic minerals.

Brazil has them.

Investors are looking for large consumer markets.

Brazil has one.

And after assembling this extraordinary collection of advantages, the expected structural growth rate is around 2.5%.

That is not an absence of resources.

It is an absence of conversion.

Brazil’s Greatest Economic Export May Be Its Own Potential

Brazilian economic history contains a recurring pattern.

A period of optimism.

Commodity boom.

Foreign investment.

Currency appreciation.

Political confidence.

A declaration that Brazil has finally arrived.

Then growth slows.

Fiscal constraints return.

Interest rates remain extraordinary.

Investment disappoints.

Productivity refuses to accelerate.

And economists begin talking about Brazil’s enormous potential again.

Potential is economically valuable only when eventually realised.

Otherwise it becomes a sophisticated synonym for underperformance.

The World’s Most Fascinating Monetary Contradiction

Brazil may provide one of the strangest contrasts in global finance.

On one side sits one of the world’s most advanced payment infrastructures.

Pix has become extraordinary.

According to the Banco Central do Brasil, more than 170 million individuals — around 80% of the population — have used Pix.

In May 2026 alone, more than 7 billion transactions were performed.

The system moved more than R$3 trillion in that month.

And the single-day record exceeded 313 million transactions.

These are extraordinary numbers.

Brazil has demonstrated that a major emerging economy can leapfrog legacy payment infrastructure and build something extraordinarily efficient.

But now look at the other Brazil.

The Brazil where companies need capital.

Where entrepreneurs need credit.

Where families finance consumption.

Where businesses calculate investment returns.

Interest rates have remained extraordinarily high.

The result is almost absurd:

Brazil has built a payment system that can move money with astonishing efficiency inside an economy where the price of money remains astonishingly expensive.

That contradiction deserves far more attention than it receives.

Brazil does not have a technological inability to modernise.

Pix proves exactly the opposite.

Brazil has an institutional ability to modernise when incentives, regulation, infrastructure and execution align.

The real question is why that capability has not been replicated across the rest of the economy.

Pix Is Actually an Indictment of the Rest of Brazil

People correctly celebrate Pix as a Brazilian success.

I would go further.

Pix is evidence against many of Brazil’s traditional excuses.

Brazil is too large?

Pix scaled nationally.

Brazilian institutions cannot innovate?

The central bank did.

Brazilian consumers resist technology?

More than 170 million individuals have used it.

Digital infrastructure cannot penetrate an unequal country?

It did.

The state and private financial institutions cannot cooperate?

They did.

So perhaps Brazil’s problem is not that transformation is impossible.

It is that successful transformation remains too exceptional.

Imagine the productivity implications if infrastructure, taxation, education, logistics, judicial efficiency and business regulation had experienced their own Pix revolution.

That is the Brazil that does not yet exist.

Then Comes the Fiscal Arithmetic

Brazil’s fiscal position makes the contradiction considerably more serious.

The IMF estimates general-government gross debt at approximately:

97.8% of GDP in 2026.

And under its baseline projections, it continues increasing:

100.0% in 2027

102.0% in 2028

103.7% in 2029

104.8% in 2030

105.3% in 2031.

These are not numbers normally associated with the fiscal flexibility of an emerging economy.

The IMF puts the problem clearly: mandatory spending, tax expenditures and a high interest bill constrain the resources available for productive investment.

And this leads to one of Brazil’s most uncomfortable economic contradictions.

Brazil increasingly carries the fiscal constraints of a rich country without yet having achieved rich-country productivity or income.

That is dangerous.

A wealthy ageing society can finance a large state from very high productivity and income.

A young developing economy can sometimes grow rapidly enough to escape debt accumulation.

Brazil increasingly sits awkwardly between the two.

Debt Would Matter Less If Brazil Grew Faster

Debt itself is not economic sin.

The United States has enormous public debt.

Japan has vastly more.

The relevant questions are what the debt finances, how expensive it is and how rapidly the underlying economy grows.

Brazil’s problem is the combination.

High debt.

High financing costs.

Large mandatory expenditure.

Insufficient public investment.

And mediocre potential growth.

That is an unpleasant equation.

If nominal economic growth consistently exceeds the effective cost of financing government debt, fiscal arithmetic becomes easier.

If borrowing costs remain high while structural real growth remains around 2–3%, the arithmetic becomes considerably less forgiving.

Brazil therefore does not simply need fiscal discipline.

It needs productivity.

Brazil Feeds the World. But Is That Enough?

Brazilian agribusiness is an extraordinary achievement.

The country is a global force in soybeans, coffee, sugar, beef, poultry and numerous other agricultural products.

It is also an enormous exporter of iron ore and increasingly important in global energy.

There is nothing economically inferior about commodities.

This distinction matters.

Agriculture can be extremely technologically sophisticated.

Mining can be extraordinarily productive.

Oil can generate enormous wealth.

Norway proves that natural resources do not condemn countries to underdevelopment.

The problem begins when resource success reduces the urgency to develop enough additional high-value activities.

Brazil needs to ask an uncomfortable question:

Is the country using commodities to finance the next economic model — or allowing commodities to become the economic model?

Those are radically different futures.

China Makes This Question Even More Important

Brazil’s economic relationship with China is now enormous.

Official Brazilian trade data show that in several months of 2026, roughly one-third of Brazilian merchandise exports went to China.

In June, China accounted for 34.1% of Brazil’s exports.

In April: 34.2%.

In March: 33.4%.

The United States, by comparison, accounted for less than 10% of Brazilian exports in August 2026.

This is one of the most important geopolitical facts in Latin America.

Brazil does not have to choose mechanically between Washington and Beijing.

Its scale gives it room for strategic autonomy.

That is an advantage.

But economically there is another question.

What exactly is being exchanged?

Brazil sells enormous quantities of agricultural commodities, minerals and energy into global markets, with China as a dominant buyer.

China exports increasingly sophisticated manufactured goods.

That relationship can be enormously profitable for Brazil.

But it can also create a long-term strategic problem if Brazil becomes exceptionally efficient at extracting and growing what China needs while China becomes exceptionally efficient at manufacturing what Brazil needs.

The New Dependency Does Not Need to Look Like the Old Dependency

Latin American economic history has spent generations debating dependency.

But 21st-century dependency may look very different.

It does not require colonial rule.

It does not require foreign armies.

It does not even require an obviously unequal commercial relationship.

It can simply emerge from specialisation.

One country exports:

soybeans,

oil,

iron ore,

beef,

cellulose.

Another exports:

electronics,

machinery,

batteries,

solar panels,

electric vehicles,

industrial technology.

Both countries benefit from trade.

But over several decades, the productivity trajectories can become radically different.

The question for Brazil is therefore not whether trading with China is good or bad.

That is simplistic.

The question is:

What does Brazil want to be selling to China in 2040?

That is the strategic question.

Brazil Should Be an Energy Superpower

Here the Brazilian opportunity becomes almost absurdly large.

Brazil combines petroleum production with one of the world’s most renewable electricity systems.

The IMF explicitly notes that Brazil is relatively protected from global oil shocks because it is a net oil exporter and because renewables represent a high proportion of electricity generation.

Think about the strategic value of that combination.

The world needs:

electricity,

biofuels,

renewable energy,

critical minerals,

food,

carbon solutions,

oil during the transition,

and eventually enormous amounts of low-carbon industrial energy.

Brazil can participate in virtually every one of those markets.

Few major economies have this portfolio.

And yet once again we arrive at the same question.

Where is the productivity explosion?

The Amazon Is Not Merely an Environmental Issue

Brazilian political debate frequently treats the Amazon as though environmental protection and economic development were opposing objectives.

That is increasingly obsolete economics.

The Amazon is infrastructure.

It influences rainfall.

Agriculture.

Water.

Hydroelectric production.

Carbon.

Biodiversity.

Regional temperatures.

And therefore economic output.

The World Bank explicitly warns that climate change and potential Amazon tipping dynamics could affect agriculture, hydropower and broader economic resilience.

Destroying economically valuable natural capital to generate short-term GDP is not necessarily development.

It can simply be liquidation.

If a company sold its factories and recorded the proceeds as revenue, nobody would call that sustainable growth.

Countries should not apply a lower accounting standard to ecosystems.

The Brazilian State Is Both More Capable and Less Capable Than Its Critics Admit

The ideological debate about Brazil usually offers two caricatures.

The left says the state needs more resources.

The right says the state is the problem.

Reality is more interesting.

Brazil has demonstrated extraordinary state capacity in specific areas.

Pix.

Agricultural research.

Public health infrastructure.

Energy.

Financial regulation.

Social-transfer systems.

But it simultaneously imposes extraordinary complexity on economic activity.

The IMF still identifies tax complexity, infrastructure gaps, expensive borrowing and rigid legal frameworks among the constraints on business investment and potential growth.

This is why Brazil’s tax reform matters.

The 2023 VAT reform is not glamorous.

It will never generate the political excitement of a presidential election.

But the IMF considers its implementation one of the reasons medium-term growth could improve.

Brazil does not necessarily need another economic revolution.

It may need thousands of boring improvements that make normal economic activity less expensive.

The Most Expensive Brazilian Product May Be Complexity

Every unnecessary hour spent complying with tax rules is an hour not spent producing.

Every unnecessary legal uncertainty increases the required return on investment.

Every infrastructure bottleneck raises logistics costs.

Every licensing delay reduces capital efficiency.

Every distortion that protects an inefficient incumbent makes a productive newcomer less competitive.

These costs rarely appear on supermarket receipts.

But eventually consumers pay them.

Workers pay them through lower wages.

Entrepreneurs pay them through lower returns.

And the entire country pays them through lower productivity.

Brazil’s structural problem is therefore not simply the size of government.

It is the cost of complexity.

And Then Brazil Is Getting Older

There is another clock running.

Demography.

Brazil is ageing.

The World Bank warns explicitly that population ageing will place increasing pressure on public finances.

This fundamentally changes the development equation.

China faces a similar problem.

But China became an upper-middle-income manufacturing powerhouse before ageing accelerated.

South Korea became rich before becoming old.

Japan became rich before becoming old.

Brazil risks something much more difficult:

getting old before getting rich.

That should terrify economic policymakers far more than the latest monthly inflation print.

Because demographic windows do not reopen easily.

The Country Cannot Add Workers Forever

A younger population allows growth through labour-force expansion.

More people enter employment.

More people consume.

More people pay taxes.

More people contribute to pension systems.

An ageing society reverses those dynamics.

Fewer workers support more retirees.

Healthcare costs increase.

Pension expenditures increase.

The fiscal system becomes more rigid.

Therefore productivity must do increasingly more of the work.

Brazil’s future cannot depend simply on employing more Brazilians.

Each Brazilian worker must eventually produce substantially more value.

That requires better education, more capital, better infrastructure, technology and more productive companies.

There is no demographic shortcut.

Poverty Is Real. But It Is Not the Most Interesting Brazilian Story

Brazil still has serious poverty and inequality.

The World Bank estimates that poverty at its $6.85-a-day benchmark fell from 21.7% in 2023 to 20.9% in 2024, supported by strong job creation, record-low unemployment and rising real wages.

That improvement deserves recognition.

But redistributing the income produced by an economy and increasing the amount of income the economy produces are different problems.

Brazil needs to do both.

Social policy can protect people from poverty.

It cannot substitute indefinitely for productivity growth.

A country cannot redistribute itself into becoming Switzerland.

Eventually it has to produce more value.

This Is Not a Left-versus-Right Problem

Brazil’s economic underperformance predates the current Lula government.

It predates Bolsonaro.

It predates Temer.

It predates Dilma Rousseff.

It survived governments of radically different ideological orientations.

That matters because Brazil has a political habit shared by many democracies:

every government attributes good statistics to its policies and bad statistics to its predecessor.

But structural productivity does not care about electoral narratives.

A country that repeatedly changes presidents while preserving the same structural constraints should eventually consider the possibility that the problem is larger than the president.

Brazil needs fiscal credibility.

But fiscal austerity alone will not transform productivity.

Brazil needs social inclusion.

But transfers alone will not generate productivity.

Brazil needs industrial policy.

But subsidising inefficient industries indefinitely is not productivity.

Brazil needs markets.

But protected markets without competition are not productivity either.

Ideology is much easier than reform.

Brazil’s Real Comparison Should Not Be Argentina

This is another intellectual trap.

Brazil often looks successful when compared with the weakest economies in Latin America.

That benchmark is useless.

Brazil should not ask whether it performs better than Argentina during Argentina’s repeated macroeconomic crises.

Of course it does.

The correct comparisons are countries that transformed scale into productivity.

South Korea.

China.

Poland.

Indonesia.

India.

Vietnam.

Not because their economic models should be copied mechanically.

But because the relevant question is not:

“Is Brazil doing reasonably well for Latin America?”

It is:

“Is Brazil exploiting the extraordinary economic assets Brazil possesses?”

Those are completely different standards.

Brazil Should Be Much Richer Than It Is

This is the central argument.

Not that Brazil is poor.

Not that Brazil is failing.

Not that nothing works.

Quite the opposite.

A lot works.

That is what makes the underperformance so frustrating.

Brazilian agriculture works.

Parts of Brazilian finance work spectacularly.

Pix works.

Brazilian aviation created Embraer.

Brazilian mining operates globally.

Brazilian energy has enormous strategic advantages.

Brazilian entrepreneurship is real.

The domestic market is enormous.

The country has avoided many of the catastrophic macroeconomic mistakes experienced elsewhere in Latin America.

The financial system is resilient; the IMF’s 2026 assessment found systemic risks contained.

Brazil is not an economic disaster.

Brazil is an economic opportunity cost.

That is a much harsher criticism.

The Problem With 2.5%

A 2.5% medium-term growth rate is not terrible.

For a wealthy mature economy with shrinking demographics, it would be enviable.

For Brazil, it should be treated differently.

Because Brazil still has enormous opportunities for catch-up growth.

Its productivity frontier remains far from exhausted.

Its infrastructure can improve.

Its education can improve.

Its tax system can become more efficient.

Capital allocation can improve.

Trade integration can deepen.

Digitalisation can spread.

Businesses can scale.

Investment can increase.

And yet the IMF’s medium-term expectation remains around 2.5%.

Brazil should therefore stop asking whether 2.5% is respectable.

It should ask:

Why isn’t it 4%?

And then ask what would actually be required to make 4% sustainable rather than artificially stimulated.

The Next Brazilian Miracle Should Be Boring

Brazil does not need another slogan.

It does not need another declaration that the future has arrived.

It does not need to choose between becoming America’s ally or China’s ally.

It does not need another ideological economic experiment.

It needs boring things.

Simpler taxes.

Reliable infrastructure.

Better schools.

Legal certainty.

Competition.

Deeper capital markets.

Higher savings.

More investment.

More technology.

More trade.

Better public investment.

Fiscal credibility.

And relentless productivity growth.

Those things do not photograph particularly well.

They do not fill political rallies.

But they make countries rich.

The Most Uncomfortable Conclusion

Brazil possesses something most countries would desperately like to have:

options.

It can export food.

Energy.

Minerals.

Oil.

Manufactured goods.

Aircraft.

Financial technology.

Renewable electricity.

Environmental services.

It can trade with China.

The United States.

Europe.

Latin America.

Africa.

It can participate in the Western financial system while maintaining strategic autonomy through BRICS.

It has a continental market large enough to support enormous domestic companies.

It has natural resources capable of financing transformation.

And it has demonstrated, through innovations such as Pix, that institutional modernisation is entirely possible.

So the old excuse becomes harder to accept.

Brazil is not waiting for someone to give it the ingredients of prosperity.

It already has them.

The question is what it does with them.

And time matters.

Debt is rising.

The population is ageing.

Technology is accelerating.

China is moving further up the industrial value chain.

India is expanding.

Southeast Asia is industrialising.

Artificial intelligence is beginning to rearrange comparative advantage.

The energy transition is creating an extraordinary window for countries with Brazil’s natural resources.

That window will not remain open forever.

Brazil Is Not the Country of the Future

Perhaps Brazil should finally retire that phrase.

It has become intellectually lazy.

Brazil is not the country of the future.

It is a country with extraordinary assets in the present.

And that makes the final question much more uncomfortable.

How many more decades can a country possess the resources of a superpower while accepting the productivity of an underperformer?

Brazil’s greatest problem is not that it lacks wealth.

It is that it has never become sufficiently efficient at transforming what it already possesses into wealth per citizen.

The world does not owe Brazil a great-power future.

Natural resources do not guarantee it.

Population does not guarantee it.

BRICS membership does not guarantee it.

Oil does not guarantee it.

Agriculture does not guarantee it.

Even technological brilliance in finance does not guarantee it.

Productivity does.

And until Brazil solves that equation, the world’s favourite description of the country will remain simultaneously flattering and devastating:

enormous potential.

After enough decades, potential is no longer a forecast.

It is the measure of what was left unrealised.

Roberto Balbino — CEO, Fintech SCB
Independent analyst of finance, economics, geopolitics and global markets.