A first-edition dossier on the Brazilian digital economy
April 8th, 2019
A comprehensive 191-page report on the Brazilian digital economy, including macroeconomic indicators, Internet trends, investment facts, and data on the overall entrepreneurship and innovation landscape.
This report is intended for all those who can play a part in driving the innovation agenda in the country – entrepreneurs, investors, public and private institutions, global business leaders, as well as digital savvy people who are curious about Brazil.
This is a curated compilation of public information and selected proprietary McKinsey data. We aspire to revise it annually with fresh data in order to tell the ongoing story of Brazil’s digital and innovation evolution.
The Brazilian economy is growing again, with Real GDP growth projected at 2.5% in 2019 and 2.7% in 2020, compared to -3.6% in 2015, 1.1% in 2017 and 1.2% in 2018. Interest and inflation rates, as well as country risk have created a favorable investment environment. However, Brazil has only seen productivity gains of 1.3% annually since 1990 (vs. 5% for India and 8.8% for China).
More than 2/3 of Brazilians have smartphones and spend on average 9 hours connected to the Internet each day (vs. 6 hours in the US), one of the highest in the world. However, Internet speeds at 13 Mbps are still much lower than developed economies and behind the global average of 31 Mbps.
Brazil has some of the most avid digital consumers globally. By number of users, Brazil ranks globally #2 for WhatsApp, #2 for Instagram, #3 for Facebook, #3 for LinkedIn, #2 for Pinterest, #1 for Waze. However, e-commerce is still lagging most developed nations with 6% of total retail sales (compared to 20% for China and 12% for the US).
Brazil's overall startup ecosystem is growing at an accelerated pace with over 10,000 startups — 46% of which are less than 2 years old — and 30,000 jobs. Venture capital investments in Brazil amounted to $1.3 billion in 2018 (vs. $859 million in 2017) and account for 66% of all investments in Latin America. As of 2018, there are 8 startups with $1+ billion unicorn status (compared to 13 in India and 92 in China). However, Brazil still ranks 109th in ease of doing business globally — for example, it takes 79 days on average to open a company (vs. half a day in the UK).
The Brazilian financial system has been prime territory for innovation. More than half of the population are active online banking users, and 58% of all banking transactions are online. There are over 400 fintech startups, and more than 7 million customers have opened accounts at digital-only banks. However, compared to developed countries, Brazil still has low penetration of nearly all financial products.
The Brazilian healthcare system does not yet meet WHO standards even though mortality and other metrics have improved significantly. Brazil still lags in areas such as electronic records, with only 23% of healthcare units using electronic patient charts and 45% still entirely paper-based. Nearly 300 Brazilian startups have already risen to the challenge and are pushing the digital innovation agenda in the healthcare sector.
Despite recent record numbers of high school and college graduates, fewer than 40% of the Brazilian population has completed high school and more than 10% are illiterate. Over 250 startups in digital education are trying to achieve scale inside and outside classrooms — distance education companies are leading the way, with 25% of all applications for higher education.