cosmetic market russia & brazil

Topics: Monetary policy, International trade, Macroeconomics Pages: 8 (852 words) Published: November 29, 2014
Cosmetic Market
The Russian cosmetic market is increasing in consistent rate between 10-12% for the past Five years and is expected to continue growing at the same pace in the coming years. The total global market for cosmetic industry is 463 BN US $ and Russia consumes 2.7% of the market at an estimated 16.5 BN US $, and it is in the top 4 countries in Europe.

Consumption Pattern
1. GDP Per Capita

The GDP per capita in Russia has been rising for the past years but at a declining rate (24.4%, 5.7%, and 3.6%). Thus it shows improvement in the standard of living for the russian population but the declining in rising percentage shows there is some problems. 2. GDP Growth rate

The growth rate is declining and might be negative in the upcoming years. which is bad indicator of the Russian economy thus it shows is suffering and might get into recession forcing the Russian government to cut on fiscal policies to avoid it. 3. Inflation

inflation is continuously rising at hit a high of 8.29% which reduce consumer spending and negative. Thus affect the negatively on the overall economy. Foreign Trade Balance
Russia trade surplus decreased to $12.95 billion in September from $15.8 billion in the previous month. The main reason was a decline in exports, due to tensions with Ukraine. However Russia's trade balance will remain in large surplus as a result of the high proportion of demand-inelastic items in the country’s exports. Fiscal & Monetary Policies

Russia adopted fiscal rule in an increase in exchange flexibility rate targeting the rise in inflation. In addition, an improved monetary policies framework is adopted. However the central bank decided to keep interest rate the same for the time being. And the government is aiming to use expansioray fiscal and monetary policies to boost the GDP but it my backfire ad rises inflation. A decrease in oil price and a rise in US interest rates will impact negatively on the Russian economy since Russia depends a lot on its oil exports for its economy.

Cosmetic Market
Brazil holds 10.8% of the total cosmetic market. And the cosmetic growth rate is growing at a good rate between 2012 grew at 6%, 2013 at 10.5% and expected to grow a further 10% in 2014.

Total Market size
21.1 BN US $
23.9 BN US $
25.3 BN US $

Consumption pattern
1. GDP Per Capita

GDP per capita has been declining in the past 3 years in brazil which indicates that theit is decline in household income and their living standard. It shows that brazil is a facing economic problems.

2. Annual Growth rate

The growth rate is declining progressively in 2011 & 2011 even though it rose in 2013 it shows the brazil economy is suffering. 3. Inflation

Inflation is kindly stable in 2014 at an average of 6,29 %. So prices are stable in 2014. Which is a good does not affect much on consumer spending since the prices are stable. Foreign Trade

The trade balance is still in deficit for October due further contractions in export. Imports moderated at a slower pace, thus excess demand in the economy is shown. Exports dropped because of high production cost for the local products thus lose competiveness for exportation. The trade balance reported a deficit of $1.2 billion, after negative results of $ 0.9 Billion in September and $ 0.2 billion a year earlier. The country accumulated a deficit of $1.8 billion in the first 10 months of the year. The domestic market continues to be stimulated by fiscal measures, although monetary policy remains restrictive. Fiscal & Monetary policies

Brazil used expansionary monetary policy, where the central bank increased borrowing costs by 50 basis points in January 2014 increasing the rate of interest to 10.5 which led to further inflation . Thus affected negatively on the economy. The fiscal policy adopted by the government has deteriorated the economy where the public spending has enlarged their deficit without...

References: 1.
Done by Yazeed Kaloti
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