Rio de Janeiro - Economy

Economy

Rio de Janeiro has the second largest GDP of any city in Brazil, surpassed only by São Paulo. According to the IBGE, it was approximately US$ 201 billion in 2008, equivalent to 5.1% of the national total. The services sector comprises the largest portion of GDP (65.52%), followed by collection of taxes (23.38%), by industrial activity (11.06%) and agribusiness (0.04%).

Benefiting from the federal capital position occupied by a long period (1763–1960), the town became a dynamic center administrative, financial, commercial and cultural. Greater Rio de Janeiro, as perceived by the IBGE, has a GDP of US$ 187.374.116.000, constituting the second largest hub of national wealth. Per capita GDP is US$ 11,786. It concentrates 68% of the state's economic strength and 7.91% of all goods and services produced in the country.

Taking into consideration the network of influence exerted by the urban metropolis (which covers 11.3% of the population), this share in GDP rises to 14.4%, according to a study released in October 2008 by the IBGE. For many years brings together the second largest industrial hub of Brazil, with oil refineries, shipbuilding industries, steel, metallurgy, petrochemical, gas, chemical, textile, printing, publishing, pharmaceutical, beverages, cement and furniture. However, the last decades indicated a sharp transformation in its economic profile, which is acquiring more and more shades of a major national hub of services and businesses. The Stock Exchange of Rio de Janeiro (BVRJ), which currently trades only government securities, was the first stock exchange founded in Brazil in 1845 and located in the central region.

Rio de Janeiro became an attractive place for companies to locate when it was the capital of Brazil, as important sectors of society and of the government were present in the city. The city was chosen as headquarters for state-owned companies such as Petrobras, Eletrobrás, Caixa Econômica Federal and Vale (which was privatized in the 1990s). After the transfer of the capital to Brasília, in 1960, it kept attracting more companies, especially after the discovery of oil in the Campos Basin, which produces most of the total oil production of Brazil. This made many oil and gas companies to be based in Rio de Janeiro, such as the Brazilian branches of Shell, EBX and Esso. The headquarters of BNDES, an important state institution, is also in Rio de Janeiro. The city is also the headquarters of large telecom companies, such as Intelig, Oi and Embratel.

Rio ranks second nationally in industrial production and second financial and service center, trailing only São Paulo. The city's industries produce processed foods, chemicals, petroleum products, pharmaceuticals, metal products, ships, textiles, clothing, and furniture. The service sector dominates the economy, however, and includes banking and the second most active stock market in Brazil, the Bolsa da Valores do Brasil. Tourism and entertainment are other key aspects of the city's economic life and the city is the nation's top tourist attraction for both Brazilians and foreigners.

Because it was once the national capital, Rio de Janeiro was chosen as the site for the headquarters of many private, national, multinational, and state corporations, even when their factories were located in other cities or states. Despite the transfer of the capital to Brasília, many of these headquarters remained within the Rio metropolitan area, including those of Petrobrás, the state oil company, and the National Economic and Social Development Bank, a federal investment bank.

A newer electronics and computer sector has been added to the older industries of metallurgy, engineering, and printing and publishing. Other manufacturing sectors focus on the production of shipyard-related materials, apparel and footwear, textiles, nonmetallic mineral products, food and beverages, chemicals, and pharmaceuticals. Construction, also an important activity, provides a significant source of employment for large numbers of unskilled workers and is buoyed by the number of seasonal residents who build second homes in the Greater Rio de Janeiro area.

To attract industry, the state government has designated certain areas on the outskirts of the city as industrial districts where infrastructure is provided and land sales are made under special conditions. Oil and natural gas from fields off the northern coast of Rio de Janeiro state are a major asset used for developing manufacturing activities in Rio's metropolitan area, enabling it to compete with other major cities for new investment in industry.

As with manufacturing, Rio is an important financial centre, second only to São Paulo in volume of business in financial markets and in banking. Its securities market, although declining in significance relative to São Paulo, is still of major importance. Owing to the proximity of Rio's port facilities, many of Brazil's export-import companies are headquartered in the city. In Greater Rio, which has one of the highest per capita incomes in Brazil, retail trade is substantial. Many of the most important retail stores are located in the Centre, but others are scattered throughout the commercial areas of the other districts, where shopping centres, supermarkets, and other retail businesses handle a large volume of consumer trade.

Major Brazilian entertainment and media organizations are based in Rio de Janeiro like Organizações Globo and also some of Brazil's major newspapers: Jornal do Brasil, O Dia, and Business Rio. Major international pharmacuetical companies have their Brazilian headquarters in Rio such as: Merck, Roche, Arrow, Darrow, Baxter, Mayne, and Mappel.

Rio de Janeiro is the 2nd richest city in Brazil, behind São Paulo and the 30th richest city in the world with a GDP of R$ 201,9 billion in 2010. The per capita income for the city was R$22,903 in 2007 (around US$14,630). According to Mercer's city rankings of cost of living for expatriate employees, Rio de Janeiro ranks 12th among the most expensive cities in the world in 2011, up from the 29th position in 2010, just behind São Paulo (ranked 10th), and ahead of London, Paris, Milan, and New York City. Rio also has the most expensive hotel rates in Brazil, and the daily rate of its five star hotels are the second most expensive in the world after only New York City.