Brazil

Topics: Monetary policy, Inflation, Central bank Pages: 12 (3987 words) Published: July 19, 2013
Sydenham Institute of Management Studies, Research and Entrepreneurship Education, Mumbai

A report on,
Country Analysis: Brazil

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Table of Contents
About Brazil2
Introduction to Brazil economy2
Gross Domestic Product (GDP):4
1.GDP per capita:4
2.GDP growth rate5
Inflation:8
Unemployment:11
Monetary Policy:12
1.Required Reserve ratio (RRR):12
2.SELIC Rate:12
Fiscal Policy:14
1.Government Budget14
2.Government Debt to GDP14
Trade Policy:16
1.Brazil Exports16
2.Brazil Imports16
3.Brazil Current Account to GDP17
4.Exchange rate (Brazilian Real-BRL)18
Conclusion:19
References:20

About Brazil
Area| 8,514,877 km2 |
Population| 198,739,269|
Language| Brazilian Portuguese|
Age structure| 0-14 years: 26.7% 15-64 years: 66.8% 65 years and over: 6.4%| Urbanization| 86%|
Ethnic group| white 53.7%, mulatto (mixed white and black) 38.5%, black 6.2%, other (includes Japanese, Arab, Amerindian) 0.9%, unspecified 0.7%| Literacy| Definition: age 15 and over can read and write total population: 88.6%| Climate| mostly tropical, but temperate in south|

Terrain| Mostly flat to rolling lowlands in north; some plains, hills, mountains, and narrow coastal belt| Natural resources| Bauxite, Gold, Iron ore, Manganese, Nickel, Phosphates, Platinum, Tin, Uranium, Petroleum, Hydropower, Timber|

Introduction to Brazil economy
Until the beginning of the 20th century the Brazilian economy was characterized by a succession of cycles, each of them based on the exploitation of a single export commodity: timber (brazilwood) in the first years of colonization; sugarcane in the 16th and 17th centuries; precious metals (gold and silver) and gems (diamonds and emeralds) in the 18th century; and finally, coffee in the 19th. Slave labour was used for production, a situation that would continue until the last quarter of the l9th century. The industrialisation process from the 1950's to the 1970's led to the expansion of important sectors of the economy such as the automobile industry, petrochemicals, and steel, as well as to the initiation and completion of large infrastructure projects. In the early 1980's, however, the significant rise in US interest rates began to affect international capital markets. The burden of its debt affected public finances and contributed to an acceleration of inflation. In the second half of the 1980's, a series of stringent measures was adopted aimed at monetary stabilization. These included ending indexation (a policy of adjusting wages and contracts according to inflation), and the freezing of all prices. In 1987, the government suspended interest payments on foreign commercial debt until a debt rescheduling agreement with creditors could be reached. The Plano Real ("Real Plan"), instituted in the spring 1994, sought to break inflationary expectations by pegging the real to the U.S. dollar. Inflation was brought down to single digit annual figures, but not fast enough to avoid substantial real exchange rate appreciation during the transition phase of the Plano Real. This appreciation meant that Brazilian goods were now more expensive relative to goods from other countries, which contributed to large current account deficits. However, no shortage of foreign currency ensued because of the financial community's renewed interest in Brazilian markets as inflation rates stabilized and memories of the debt crisis of the 1980s faded. In January 1999, the Brazilian Central Bank announced that the real would no longer be pegged to the U.S. dollar. This devaluation helped moderate the downturn in economic growth in 1999 that investors had expressed concerns about over the summer of 1998. Brazil's debt to GDP ratio of 48% for 1999 beat the IMF target and helped reassure investors that Brazil will maintain tight fiscal and monetary policy even with a floating currency. The economy began to grow more rapidly until the 2008-2010...

References: www.bcb.br (Central bank of Brazil)
www.tradingeconomics.com
Bloomberg
www.heritage.org
brazil.gov.br
Macroeconomics (Samuelson- 5th edition)
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