Conclusion Brazil has the largest economy in Latin America and is Canada's largest trading partner in the area

a In the most recent year, total government expenditures, including consumption and transfer payments, held steady at 41 percent of GDP. Public debt is now below 40 percent of GDP. Besides debt service, government spending is focused mainly on pensions, transfers to local governments, and the bureaucracy. Additional planned stimulus spending will widen the overall fiscal deficit. Tax and pension reform, abandoned during the global crisis, are back on the fiscal agenda. Economic stability has not been easy to achieve in the past. High rates of inflation and large inequalities in incomes have become characteristics of Brazil's economy. In the past few years it has followed tight monetary policies and more market-based economic strategies, which have reduced inflation but at the cost of recession. Most recently, there has been a growing concern with its financial sector and currency, which has forced devaluation and borrowing from the International Monetary Fund. Brazil has overcome economic difficulties in the past and, it is hoped, will again. Otherwise, the country could experience more economic symptoms similar to those endured recently by Asian countries. Because it is the largest economy in Latin America, trouble in Brazil would likely spread to other countries in the area. Private-sector competition. A Credit Guarantee Fund was introduced in Brazils financial sector is diversified and competitive, but the states role remains considerable. Public-sector commercial and development bank assets account for around 40 percent of the financial systems total assets. The two largest state-owned banks control about 25 percent of total assets, and the government directs banks to channel loans to preferred sectors. Three of the top 10 banks are now foreign-owned. Brazils insurance sector is now the regions largest, and the reinsurance market was opened to 2009 to provide state guarantees on bank certificates of deposit.

Foreign investors are granted national treatment, but foreign investment is restricted in several industries. In general, Brazilian nationals must constitute at least two-thirds of all employees and receive at least two-thirds of total payroll in firms employing three or more persons. Bureaucracy and administration are non-transparent, burdensome, complex, and subject to corruption. Legal disputes can be timeconsuming. There are few restrictions on foreign exchange transactions.

Foreign investors, upon registering their investments with the central bank, may remit dividends, capital (including capital gains), and royalties. The central bank regulates outward direct investment in some cases, including transfers and remittances. Foreign investors must obtain specific authorization to purchase land along borders.

The states role in the economy has been heavy and even increasing. However, the efficiency and overall quality of government services remain poor despite high government spending as a percentage of GDP. Barriers to entrepreneurial activity include burdensome taxes, inefficient regulation, poor access to long-term financing, and a rigid labour market. The judicial system remains vulnerable to political influence and corruption

Corruption is perceived as significant. Brazil ranks 75th out of 180 countries in Transparency Internationals Corruption Perceptions Index. Corruption can be an obstacle to investment. Businesses bidding on government procurement contracts can encounter corruption, which is also a problem in the lower courts.

Rigid and outmoded labour regulations undermine employment and productivity growth. The non-salary cost of employing a worker is high, and dismissing a redundant employee can be costly. Mandated benefits amplify overall labor costs. The informal sector remains sizeable.