As Brazil’s current demographic bonus is set to fade out, future growth will need to come increasingly from productivity improvements, which have so far contributed less to economic growth than in other regions of the world. Productivity growth has also been uneven across firms and, unlike in several Asian economies, flexibility to allocate resources to the most productive firms within sectors, is limited. Structural reforms could raise productivity and competitiveness in several areas. Reducing infrastructure bottlenecks could reduce the cost of transport and improve productivity. A high tax burden, exacerbated by an onerous and fragmented tax system and unnecessarily high administrative burdens, puts Brazilian producers at a disadvantage. A tight labour market, continuing skill shortage and stimulus policies that fuelled consumption growth have implied strong wage increases. Investment financing at longer maturities continues to be scarce due to a lack of both private participation and competition in long-term credit markets, owing to an uneven playing field dominated by the national development bank. The exposure of Brazilian firms to foreign competition has remained below that of many other emerging economies, which has limited incentives to improve efficiency and increased downstream production costs.