The Strengths And Factors Of Stability

Published Date: 02 Nov 2017

http://www.learn4good.com/schools/frontend/img/school_logos/5/logo_5355.jpg

| |Niharika Kumar, Wenyu Wang, Hecniel Quinones, Pazhani Nataraja, Chia-Hsun Tsai, Lingesh Palaniappan |

http://3.bp.blogspot.com/_kC5MT2r5U8s/TSWB5k3EuSI/AAAAAAAARs0/71EW6zqK5lk/s1600/brazil+flag+map.png

Submitted to: Professor Mohtadi in partial fulfillment of MIB Course: Global Economics.

Submitted by: |Niharika Kumar, Wenyu Wang, Hecniel Quinones, Pazhani Nataraja, Chia-Hsun Tsai, Lingesh Palaniappan|

TEAM 10

Country Paper: Brazil; A Case Study.

Country Paper

(BRAZIL)

A Case Study

Submitted to:

Professor Mohtadi

In partial fulfillment of the BMIB course

Global Economics

HULT International Business School

Submitted by:

Team 10: Wenyu Wang, Pazhani Nataraja, Scott Tsai,

Niharika Kumar, Hecniel Quinones, Lingesh Palaniappan

Boston, Massachusetts,

March 1, 2013

Table of Contents

Page 1-2 Cover Pages

Page 3 Table of Contents

Page 4 Introduction and Demographics

Page 5-11 Strengths and Factors of Stability

and Opportunities of Growth

Page 12-17 Weakness and Threats

Page 18-22 Fiscal, Monetary, and Social Policies

Page 22-28 Trends in Growth, inflation, GDP, and Debt

Page 28-32 Exchange Rate and Trade Policies

Page 32 Conclusion and Recommendations

Page 33-46 Appendixes

Page 47-50 References

BRAZIL

Introduction and Demographics:

Brazil is officially known as Federative Republic of Brazil, and it ranks as the sixth biggest world economy in regards to nominal GDP and purchasing power parity, with a population nearing 200 million. It is the largest country in South America, and its’ territorial ampleness, combined with its natural resources wealth gives it a clear advantage over other countries that suffer from limited diversity of natural resources and land deprivation. Brazil’s comparative sources of advantage lie in climate, resources, and relative abundance of agriculture. Some of the agriculture the country produces includes coffee, soybeans, wheat, rice, corn, etc (CIA, 2012). Nonetheless, the country is vulnerable to deforestation issues in the Amazon Basin and other environmental issues.

The country is battling high inflation, currency appreciation, and high interest rates, in which the government is utilizing expansionary fiscal and monetary policies, in order to gain control of the economy. The country’s major exports include agriculture, communications, and services, and Brazil currently possesses a slightly above average exchange rate in comparison to other emerging economies. The GDP growth is volatile, while many opportunities such as the Olympic games and recent oil discovery have the capability of increasing real GDP growth tremendously. High internal and external investments are being required to fund the reconstruction of Brazil’s infrastructure. This paper will proceed to analyze Brazil’s economy in the past decade, and provide future insights and implications.

Strengths and Factors of Stability:

One of Brazil’s prominent strengths is indefinitely its’ geography and the natural resources. Being the largest nation on the continent of South America, the country expands and includes the highlands, oceans, and the Amazon River Basin. This allows easy access for other countries and for diversity of agriculture within. Brazil consist of over 7.3% arable land as of 2007and 5.5 hectares of irrigated land. This is perceived as a strength due to the agricultural resources which mainly include: rice, beef, cattle, pork, soybeans, oranges, wheat, dry beans, coffee, cotton, tomatoes, sugarcane, cocoa (Cacao), peanuts, cassava, corn, and potatoes. Moreover, Brazil’s natural resources mainly include: iron ore, manganese, bauxite, nickel, granite, limestone, clay, sand, tin, gold, platinum, uranium, gems, phosphates, petroleum, timber, and fresh water ("Mapsofworld.com," 2011). Overall, Brazil’s relative abundance of natural and agriculture resources currently proves to be a source of comparative advantage for the economy.

Brazil’s abundant natural resources and geography allows exports of those goods in the international market. Brazil’s main trading partners are China that includes 17% of exports and 15.4% of imports, and the United States with 11% of total exports and 14.5% of imports. Other countries include US, Argentina, Germany, and Japan. Hitting a high trade growth of $209 billion in 2010, with the top exporters being iron, sore, and soya. The natural beauty also captivates the world and is a huge importer of tourism as Brazil is seen as a fairly new tourist spot. The country had 5.1 million visitors in 2010 where revenues reached $5.9 billion by 2011. The huge importation of tourism, along with reduction of import barriers in the long run, has ultimately led to high consumer confidence.

Another strength of Brazil lies in its’ recent increase in consumer confidence and political stability with President Rousseff’s appointment. Employment is slightly rising and companies are avoiding laying off workers. With relatively more normal interest rates and currency appreciation, as compared to previous decades, a trend of more consumable spending over time is anticipated. President Rousseff can be viewed as a strength due to her encouragement of the country’s’ entrepreneurship and building a new generation of start-ups. In an attempt to overcome the financial crisis that hit the country, she incentivized production and manufacturing, which would help grow the economy and increase real GDP by increasing supply, and ultimately shifting aggregate demand to the right. While the overall stock market is on a decline trend, investors still have their money in Brazilian companies because they are anticipating the emergence of the economy at a fast pace. Brasil Foods proves to be one of the top stock market performers, which is up 4.6% for the past 12 months. Additionally, many investment giants have showed interest and commitments to investing and expand their business in Brazil, such as Blackstone group, which recently announced a $200 million investment in Patria.

The primary factors that attribute to the stability of the economy are the emerging business environment, more stable public and private sector than other BRIC countries, stable unemployment rate, and relatively higher GDP growth. The sustainable economic growth can be correlated with substantial investments from internal and external investors, particularly in infrastructure. The government’s macroeconomic policies of lowered interest rates, along with strong bank supervision, have allowed credit ratings to increase to a current BBB as of 2012 according to Fitch and S&P. This allows for the forecasted investment to be at a real growth level of 5%, which would account for 19.3% of GDP. The current open market policies allow for Brazil to give national treatments to foreign investors by increasing credit. Therefore, continuous investment is allowing Brazil to stabilize the economy by allowing infrastructure to grow.

Local capital markets are being sustained through public and private sector growth. An increase in public sector focuses more on discretionary spending such as infrastructure and social programs. The current national budget demands BRL 959$ billion until 2014 which includes excess funding for housing, highway construction, etc. One of the main reasoning for the escalated budget and governmental spending are the upcoming sporting events that are coming up in 2014 World Cup and 2016 Summer Olympics. As said by Moody’s Economist Martin Soler Garcia,

"The bank will help fund projects for the sporting events in 2014 and 2016, financing 70% of the airport upgrades needed for the World Cup. These upgrades will inject BRL13.2 billion over the next two years. The bank will also fund hotel, urban renewal projects and some mass transit projects".

Private sector growth has been nourishing the continuing growing economy in many ways. Public and private joint ventures are becoming attracted to the Brazilian economy to make up for the lack of infrastructure support over the past two decades. The government has sustained the funding in the private sector as,

"…The government will facilitate the investments through loans from state-run banks at below-market interest rates. Passos said these new investments and concessions will help jumpstart Brazil's stalled economy, whose growth forecast for this year has been lowered from 4 percent to less than 2 percent. This new program is Brazil's third large-scale infrastructure plan since 2006" (Batisa, 2012).

This specific plan aims to sustain the economy by doubling the country’s highways, roads, and railways in order to eliminate the country’s bottlenecks, which were a huge part of stagnation for Brazil.

Last but not least, stable unemployment rates and comparatively increasing GDP have helped stabilize the economy. While these economic indicators are not at their utmost desired levels, the marginal increase of forecasted GDP growth is helping to stabilize the economy and the Brazilian Real. The IMF forecasts a GDP growth in Brazil to be 5.5% and the Central Bank of Brazil to be 6% over the next three years (Adam, 2010) and (Appendix A4). Due to the recent EU crisis, investors are shifting their funding to emerging countries such as Brazil, where the government is conducting an aggressive monetary policy,

"Investors are also nervous about the sovereign debt crisis in the EU, and are responding by temporarily moving funds back to safe haven currencies. We’re seeing a lot of declines on top of concerns about Greece and Europe. Flows will come back to Brazil when you have signs of stability out there..."(Adam, 2010).

Additionally, the unemployment rate is on a decline trend, despite the global recession, which means the Brazilian government has been utilizing the Keynesian affect and implementing expansionist monetary policies and boost a financial stimuli. As said by Jim O’Neill "Having a low unemployment rate meant that Brazil had a large number of wage earners to keep demand for Brazilian manufactured products high" (Williams, 2011) and (Appendix #A5). These strengths and stability factors are a huge component that arise new prospects of growth.

Opportunities of Growth

Brazil has proved to be a fast growing country in the past few years with a GDP increasing from $8,629 million in 2008 to $12,594 million in 2011, while in the same period U.S increased from $46,760 million to $48,112 million (CIA, 2013). Major opportunities such as increased consumption, adequate labor force, investment possibilities in infrastructure, opportunity costs of natural resources, and the recent oil discovery are all factors positively directly affecting economic growth.

As an aspect of the current inflation, CPI Index shows that during the financial crisis Brazil went into a recession from 2007 to 2009. The lowest point in 2007 was 2.988 %, however the inflation rate stabilized the following year (Global -rate.com, 2013) and (Appendix #F1). From analyzing the core CPI, the consumption in Brazil has increased in the 1990s and remained almost constant even during the financial crisis. This reflects that their aggregate demand increases directly causing a rise in the GDP. The total population in Brazil is 200 million people, which is a huge domestic market. The financial crisis experience showed that this market had the ability to increase their consumption power even when international markets shrunk. The great percentage of the people willing to buy, led the aggregate demand to increase the GDP yearly (FRED, 2012).

Brazil has an adequate labor force which is around 107.1 million for 2012 and ranked as the 6th largest labor force in the world. The labor component is around 20% in agriculture, 14% in industry and 66% for services (CIA, 2013). Moreover, Brazil’s cheap labor force presents a great opportunity for companies that want to stabilize growth. It also has a more or less stabilizing unemployment rate, thus increasing the morale of both workers and industries in need of labor force. In an economic analysis, we can decipher the aggregate supply and aggregate demand will increase as consumption increases, further causing an increase in real GDP. Moreover infrastructure in Brazil provides prospect for the import and export in the future. Brazil is the second country with the largest amount of airports in the world in 2012, along with efficient roadways and waterways (CIA, 2013). For this part, the companies can lower the price of transportation and have more options to shipping their cargo from one city to another. This presents an opportunity for expansion due to the improvement of the transportation infrastructure, thus increasing government expenditure. The increase of such projects will increase the demand for jobs and work force.

The resources in Brazil can be divided into three subsequent parts, namely, raw material, natural resource and land. Iron mining is estimated to produce about 350 billion tons, representing 35% of the world’s production. Having sufficient transportation system and available resources, cost of products made in Brazil can decrease. These goods have a more competitive cost advantage and local firms have a broader profit margin. The demands for export will be more attractive and the GDP will eventually increase parallel with sales. As for the acreage of arable area, the country uses about 30% for agriculture. This implies that the rest is available future development in that sector. With ideal climatic conditions, Brazil’s agriculture can be successful if they diversify their agriculture based on demand. In other words, Brazil can play a major part in the reduction of food scarcity in Latin American countries. The existing cultures can be further developed to increase their profitability.

The "Manaus Free Trade Zone" (Yung chien, 2012) is the biggest trade zone in Latin America and one of the most developed in the world. Since it is a tax free trade zone, no extra Federal state or local tax should be paid. It decreases the opportunity cost for the traders, thus attracting investment from international corporations. This facilitates trading with other countries, since it abides by international requirements. The only minor difference is getting an extra permission from SUFRAMA (Superintendência da Zona Franca de Manaus) (Superintendência da Zona Franca de Manaus (c), 2004). Overall, the free zone area proves to be a great benefit for the multi-national companies that ship from place to place lowering cost.

Brazil’s major sources of energy are from oil and hydroelectric plants. Half of the oil is produced locally whereas the rest is imported (Tw.18dao.net, 2006). In January 2012, EIA forecasted that the Brazilian oil consumption will increase to 2.8 million barrel per day (1 barrel=42 gal) and in 2013 will be 3.0 million barrels per day. The average liquids consumption in 2010 was 2.6 million barrels per day (Appendix #F2). Over the years the oil-extraction technology has blossomed, lately contributing to a rapid growth of the economy by 1% of GDP in 2011. At the same time with reduced production and rising prices of ethanol, Brazil was forced to import refined petroleum products from the United States (EIA, 2012). But with the recent discovery of offshore oil sources, it can be assumed that the price of oil will stabilize with an increase in supply, as a direct result of increased production. As a consequence, net exports will increase substantially because exportation of oil will overcome importation of oil. More importantly, there will be no supplement government expenditure funding oil projects, but investment from the private sector will increase. This indicates a surge in money supply and in the short run, will be beneficial to the economy. In the long run, the economy will be vulnerable to high interest rates, but consumption will increase. All factors would contribute to the increase in real GDP by more than 1% in the future.

Weaknesses and Threats:

Brazil shares a host of disadvantages contained within the Economic, Political, Social, and Demographic spectrum. According to Ganaderia Mexico (2011), "Brazil's star status relies on exports of oil, iron ore, copper and other commodities. As a result, the country "will become increasingly vulnerable to violent swings in commodity prices and to the coming slowdown of China’s economy. Brazil has favored economic stability over economic growth, using high interest rates to tame hyperinflation and keep it tamed". Brazil shines over other superpowers thanks in large measure to its abundance of natural resources, but this in turn makes the country susceptible to price wars.

In order to further delve into the plausible economic weaknesses that Brazil currently drags, we have to understand the variables that shape and alter the economic structure of Brazil. One of the most important factors that aid on the development of the economy is the interest rate. As stated by K. Gartlan and A. Stewart (2010),

"The interest rates have attracted foreign capital and strengthened the Brazilian real, whose value against the U.S. dollar has doubled in the past 10 years. This has allowed for the manufacturing share of the economy to subside (when compared to developing-country standards), and continues to slump. This has caused difficulties amongst farmers in the region, as they have to deal with high interest rates and a strong real."

The vast appreciation of the Real, alongside the current high interest rates causes production and supply of goods to decline, resulting in an increase in prices, hence producing multiple supply shocks. In addition to the aforementioned conflicts, the Brazilian domestic market has been hindered from its potential growth due to high domestic cost and taxes that limit the surge of local producers and suppliers in favor of increased imports.

"Infrastructure spending has failed to keep up with the booming growth of the past decade, putting huge strains on roads and ports. That means farmers often proportionally pay four times as much to get their goods to port as their U.S. peers. Another reason is taxes. Brazil collects about 35 percent of its economic output in taxes, far above the Latin American average… Brazil's left-leaning leader has tried to revive the economy by weakening the currency, dishing out tax breaks, and creating conditions for an historic drop in interest rates. But many investors have criticized her actions for their unpredictability and seeming randomness, and have soured on Brazil as a result." As stated by B. Winter (2012).

As we analyze the social burdens that hunt Brazil, we find extreme levels of disparity between the very affluent individuals and the ones that live between the lines of poverty. As seen on Appendix D, Exhibit 2, Brazil has a total population of 199,321,400 inhabitants, making Brazil the most populated country of South America. According to one of the most recent studies conducted by PNAD, 41.4% of the total population in Brazil lives under poverty, of which 11.3% live under extreme poverty, accounting for 20.3 million of people. The total amount of the population living under poverty is said to be above 65 million inhabitants, as published by PNAD (DISOC/IPEA 2005). When determining the accuracy of this data, we have to decipher the components influencing such poverty rates. According to a research report conducted at the Universidade Federal Rural do Rio de Janeiro, "In Brazil, the prevalence of disquieting poverty is largely blamed at the adverse inequality in the distribution of income; three poverty levels being more susceptible to alterations in levels of inequality than the variations in economic growth, as described by Rocha (2005) for UFRRJ". The inequality economic growth causes a wealth disparity, which hits home for every Brazilian as it affects the real disposable income distribution.

This same institution advocated for the assertion of the factors that play in this,

"The parameter commonly used in Brazil to measure poverty is the official minimum wage (US$ 188 per month as of April/07), where poor families are considered to be those with a per capita monthly income below ½ of the minimum wage (US$ 94), and families in extreme poverty as those with a per capita monthly income below ¼ of the minimum wage (US$ 48). This presents high levels of inequality and poverty that face a historical problem of combining economic vitality with an acceptable degree of social equity. Brazil’s social profile is highly unfavorable in terms of any standard of distributive equity that could be applied, a fact that becomes evident when we compare the levels of poverty and inequality with countries analogous in terms of per capita income", as published by Salama, UFRRJ Researcher (2006).

A study conducted by (Néri et al. 2006) reveals a reduction in inequality measured by the Gini coefficient in which a stagnant pace of change is forecasted for the long run, shifting the value from 0.58 (1992) to 0.56 (2005). Overall, domestic poverty proves to be a huge weakness in Brazil as it affects many GDP components such as consumption.

The Brazilian Government has also become a great detractor to outside sources and investors, as it has been traced with a history of large political corruption. An article published by the International Bar Association gives great detail on the cases that have irrupted social media, and how these have an impact on the bureaucratic agencies and their performance.

"Most parties lack a consistent or even discernible ideological position. Agencies that control large budgets are hotly disputed; this has had an immense effect on current Federal highway investments, which came to a halt last year and are still running way behind schedule because of a kickbacks scandal that toppled the Transportation Minister." As transcribed by B. Nicholson (2012).

Alongside political corruption, residents are also haunted with an unwavering increase in violent crimes and assassinations. As presented on Appendix D, Exhibit 1, we can see a steep decrease on the birth rate, while in contrast, there is a lifted raise on the death rate, and it is expected to maintain that trend in the upcoming years.

As published on the research portal, Heritage.org, Brazil has a score of 57.7 when it comes to economic freedom.

"Brazil is ranked 19th out of 29 countries in the South and Central America/Caribbean region, and its overall score is below the world average. Despite some progress, corruption continues to be pervasive ...Progress with market-oriented reforms has been uneven. The burdensome regulatory environment discourages private-sector growth and hampers realization of the economy’s full potential. Increasing inflationary pressure poses a risk to overall macroeconomic stability. Business confidence has floundered, with foreign investments declining about 40 percent in the first half of 2012." As published on Heritage.org (2012).

The relative score for doing business in Brazil is also a major detractor, currently positioning Brazil in the 130th position in the Doing Business Rank, as conducted by The World Bank Group organization. This further limits the possibilities for startups and the creation of local business, while adding a verging barrier on the attractiveness of the country for investors. The corruption index is also a prime indicator that can shed further light to the current political and social situation within Brazil boundaries. Brazil currently ranks in the 69th position, with a score of 43; placing it halfway through the most depraved countries in the planet, as promulgated by Transparency International (2012). Thus, the massive amounts of corruption that engrosses Brazil demonstrates a huge limitation in an emerging economy as it hinders investment and tourism, which eventually has the potential to vastly decrease GDP growth.

Education remains, to this day, a major weakness in Brazil’s portfolio. Access to education is pretty much omnipresent throughout most territorial stretches of the country; however the public educational system suffers from a necessity of resources to disseminate instruction and formational counseling in an efficacious manner.

"Until recently, there seemed to be a consensus that the problems of Brazilian education were that there were not enough schools, that children abandoned education in large numbers at early ages, and that the government did not spend enough money in education…The main problems were quality and retention, that is, the tradition of holding the children back when they do not perform as expected in school exams, a widespread practice in Brazil" (Fletcher 1984; Klein and Ribeiro 1991).

With the slowdown of demographic expansion and migration, Brazil started to face, for the first time, problems of empty classrooms. Today, there are 43.8 million students enrolled in basic education for a total population of about 36.5 millions in the corresponding age bracket of 7 to 17, an unrecognized excess of more than 7 million places", as promulgated by the Centre for Brazilian Studies, University of Oxford (2003). In the long-run the lack of educated human capital will hinder the economic development and future growth.

Pestle: Threat

Brazil's government has been able to make a transition in order to attain the common interest of its inhabitants. This transition has allowed for a more autonomous and constitutional ruling, while allowing for equalitarianism (allowing people to participate in the governmental rulings and processes). However, autocratic laws are still used as models of conduction in the conception of new legislations. According to F. Hagopian and S. Mainwaring (1987):"While Brazil has made the passage from authoritarian to democratic government, it has yet to develop a well-defined and institutionalized democratic regime. Political institutions, particularly Congress and parties, at times more closely resemble objects of authoritarian rule than pillars of a democratic order."

As long as corruption practices run aloud through Brazil's governmental structure, we will continue to see cases of bribery, injustice, mischief, disregard, and oblivion. All of these practices mark Brazil with a red flag, as many fear for the inviolability of their investments and the stability that the nation will exhibit throughout years ahead in time; hence this is a huge threat, not only internationally but also to the regional Brazilian community. The economic effect will occur by decreasing investments if political instability continues in this rate, directly affecting the real GDP.

The decline in fertility rates amongst the Brazilian population is another aspect that raises a red flag (Appendix #D 4-5). Given that this is a country with a very diverse ethnic and cultural background, it is somehow surprising to see the backsliding that fertility has gained in concurrent years. But to better understand what is causing such surprising decline, we have to understand the evolutionary aspects of society in Brazil. According to Suzana Coveghani (2012),

"Women were empowered by a pro-democracy movement that rose up against a 1970s-era military dictatorship. That dictatorship, which wanted to populate Brazil’s remote areas, inadvertently contributed to fewer births by promoting industrialization. That led rural families to crowd into cities, where a brood of children could be a financial drain. Women began to look for means of birth control, easily obtained without a prescription. Doctors in the public health service provided sterilizations, which became common, and women sought out pills that induced abortions long before those pills became the subject of controversy in the United States."

While some to the overall evolution of society may see this transformation in procreation as beneficial, the impact that it could have in the future would be of great detriment; Brazil will continue to exhibit a population decrease with fewer births and an increased death rate. As published by J. Magno de Carvalho, " With the significant fertility decline in Brazil, an increasing gap between observed age distribution and that of the stable population was perceivable. The stable population had an older age structure…".

The continued appreciation of the Real currency is also an imminent threat to local and foreign businesses. If the Real continues its trend of appreciation, it will have a marked impact on exports and on the potential manufacturing investments that could be associated to the local market. Added to this, we find an annexed threat to the exchange rate of the Real with foreign currencies. "Brazil's currency has gained nearly 40 percent in the last two years and is likely to remain strong on continued investor appetite for assets in Latin America's largest economy." As published by Reuters (2011).

Fiscal Policies

According to Riley (2012), what we call a fiscal policy is one which ‘involves the use of government spending, taxation and borrowing to affect the level and growth of aggregate demand, output and jobs.’ A fiscal policy is a mean by which income and wealth redistribution within an economy can be achieved, as well as an instrument of intervention in correcting free market deviations. A major implication of implementing fiscal policies by countries is to change the pattern of spending within that country in terms of goods and services.

Fiscal policies and aggregate demand work closely together since the downward slope of aggregate demand is due to interest rate effect (Boundless, 2013). Fiscal policy refers to the choices made by a country’s government regarding the government expenditure and taxes imposed. Such policies have a direct effect on savings, investment, and growth in the long run, meaning that it has a direct effect on a country’s GDP based on the equation below:

GDP = C + I + G + NX

Where C is the private consumption, I the gross investment, G the government expenditure and NX the net export (Wikipedia, 2013). In the short run, it is the aggregate demand that is directly affected by fiscal policies. In most cases fiscal policies are applied to stabilize an economy.

Fiscal Policies in Brazil

Brazil is one of those countries that have been less affected by the financial crisis of 2008. It was actually one of the last major economies to be affected and one of the first to get out of it. Before this crisis, Brazil was showing a strong economic growth and performance and the only problem that the government faced was the controlling of the inflation rate, which was caused by a considerable increase in domestic demand and rise in the price of commodities worldwide. According to (Appendix #A 1), the inflation rate was at its lowest at 4.5 % in 2008 and it has since been increasing to 6.5 % in 2009. As the current President Rousseff, has said recently at the UN round of General Assembly, the government had to take the decision to apply such policies that would have triggered investment and demand in such a way that would alter the effect of the crisis (Merco Press, 2012).

Brazil was a country with a slow economic growth in the 1980s and this was due mainly because of the tremendous amount of foreign debt that the government at that time had contracted. The country was near bankruptcy, with an inflation rate of 4,000%. In the late 1990s, the government adopted a Fiscal Stabilization Program, which had a positive impact on the fiscal position of Brazil by diminishing the Brazil’s debt to GDP ratio. On the other hand, the Brazilian government in order to boost the economy increased its spending by 7%. This stabilized period ended with the recession in 2008 and the cost of domestic lending rose.

Unfortunately the gradual decrease in demand for Brazilian products had made the economic situation precarious. But in order to face these conditions, fiscal policy reforms that reconsider the indirect tax system are being implemented. This is a system where tax is shifted from one taxpayer to another by an increase in the price of goods, that is the end consumer being the one paying the highest tax. According to some economists, this could lead to an inefficient market place and alter market prices such that it does not match the equilibrium price (Investopedia, 2013). The application of such a system would be to lighten the tax applied on the major manufacturing industries and financial sector. Other fiscal policies applied are the decrease in social security contribution and increased minimum wage that will contribute in increasing household spending and capital investment.

Brazil and its Monetary Policies

A monetary policy is one which is used to regulate the money supply and interest rates of an economy by its Central Bank, in order to control the inflation rate and the appreciation or depreciation of that economy’s currency (WebFinance, 2013).

The first step taken by the Central Bank of Brazil after the recession was to reduce the compulsory deposit reserve that banks held with it. This implied that the Central Bank has encouraged commercial banks to lend more money out to the population. This would exhibit an increase in both money multiplier and the money supply. Currently, Brazil’s Banco Central’s main focus is to keep inflation rates as low as possible and to avoid short term capital flows that are threatening to destabilize the economy. Brazil is applying low interest rates to render short term capital flows unattractive to foreign markets, but this has a negative side where the Real has weakened against other major currencies, thus making imports cost more.

According to Bloomberg (2013), monetary policy stimulus will fail to boost the Brazilian economy as per the Central Bank, due to the fact that interest rates have been to a record low level for a prolonged period. Inflation rate is increasing and unemployment rates together with a decrease in investment and industrial output are offsetting efforts to revive growth by stimulating consumption. This situation has been found to be caused by a factor that monetary policies cannot tackle, namely supply limitations being faced by the country. This is where the Banco Central Do Brasil reaches its limit in boosting economic growth with its monetary policies.

Social Policies applied by the Brazilian Government

During the last few years, based on the Stiglitz-Sen Report recommendations, Brazil has been adopting four major social policies. These policies are completely different from the fiscal and monetary decisions, as they do not focus on the GDP of the country, but they indirectly have an effect. The first policy was to increase the country’s stock of wealth. Brazil is rich in natural resources and it is important that those resources are used appropriately so as to avoid exhaustion, especially concerning the environment and the protection of the Amazon rain forest.

The second social policy concerns household flows of fund allocations, which are important for the welfare of aggregate demand and the economy in general. The other two social policies put in placed concerned the distribution of resources and subjective measures of well-being of the population for a prosperous Brazil. A target that the government has set is to eradicate poverty by the year 2014 and to increase the percentage of the population having access to secondary and professional education.

Since 1988, the Brazilian government offers free healthcare for all legal residents of Brazil, known as the ‘Universal Healthcare System’. This system came into place during a period of fiscal deficit, recession, inequality in access to healthcare and demands for change. The Sistema Unico De Saude (SUS) is responsible for the funding of healthcare and during the last few years, those healthcare expenditures have accounted for a rise from 6.7% to 7.5% of the GDP (Foreign Policy, 2009). With such a growth in the cost of its healthcare system and the cost of other social programs, especially anti-poverty ones, Brazil will have ensure a right balance in its funds distribution so as not to affect its economic stability, which is very important for attracting foreign direct investment.

Trends in growth, inflation, unemployment, debt

The latest forecast of 2013 GDP growth rate of Brazil is 3.08%, which is higher than the estimated 2013 global GDP growth rate of 2.4%, and slightly lower than the Latin American and Caribbean growth rate of 3.9%(Investopedia, 2013). The average real GDP growth rate from 2008 to 2012 has been 3.32%, showing an overall optimistic growth of the Brazilian development. But with the financial crisis, there has been a drop from 2008 to 2009, shown as a negative GDP growth rate of 0.33%(2013.CIA). After 2009, Brazil’s economic situation began to recover, resulting from a series of functional actions that Brazil took to defend themselves in the international financial crisis. However, the forecast of 2012 GDP growth is down to 1.47%, somehow indicating the recently disappointing performance by Brazilian economy. Therefore, the overall trend of economic growth of Brazil is increasing, while there are potential problems that may slow down speed of growth (Appendix B1).

The combination of the main fragilities of domestic borrowers and foreign investors brought Brazil a shock on the economy and reflected as a negative real GDP growth (Appendix B1). These are long-established problems in the Brazil economy, and the high uncertainty environment generated by international situation, at the end of 2008. Nonetheless, compared with the considerably negative impacts on other developing countries, this crisis did not cause a severe disaster to the Brazil economy. One basic rationale is that the worldwide crisis happened in a moment of Brazil strong economic growth period, which provided defensive macroeconomic fundamentals. More importantly, the Brazilian government implemented several rational measures to lessen its’ effects on the country. The actions taken covered the fiscal, monetary, exchange rate and credit fields—all of which contributed in the gradual recovery of its economy.

In the areas of fiscal, credit and monetary, the sectors most affected were targeted by the government. ("Actions by the government," 2009) From the macroeconomic point of view, a series of tools were utilized in the expansionary monetary policy used to alleviate the crisis. This resulted in the increase of the rate of growth and real GDP by increasing the amount of reserves in the system, lowering federal funds and other interest rates. The decrease of real interest rates in 2009, as a result of the removal of inflation index and the increase in supply of credit, has motivated domestic investment and consumption. Additionally, the reduction of compulsory deposits was announced in the banking system. Since the threat of high volatility is posed on the interest rate and exchange rate markets, Brazil was in a serious risk of a high liquidity position. Based on expansion of monetary and credit policies, these timely actions increased the amount of money that circulated and increased liquidity. At the same time, for domestic financial institutions, the Central Bank of Brazil made 24 billion BRL prepared for large banks to purchase portfolios of small banks with solvency or liquidity problems ("Actions by the government," 2009). With reference to the fiscal policy, the tax rates were reduced (especially on industrialized products in automobile and major household appliance industries), a flexible target fiscal surplus was accepted (from 3.75% GDP to 2.5% of GDP), and domestic investments were expanded.

However, after 2009, the economic growth showed the long-run threats to the macroeconomic environment created by the restored flows of capital. A right shift of the aggregate demand curve resulted in a tendency of the Brazilian Real to appreciate, which may harm Brazil’s Balance of Payments and potential inflation. ("Brazil responses ," 2011)

After 2009 crisis, the real GDP growth rate became positive after the drop, however, as the threats mentioned above, the real GDP growth rate decreased from 2010 to 2012, from 7.53% to 1.47. The main reason lies in Brazil’s weaknesses of exports and investment which offsets the private and government consumption, which is a percentage contribution of GDP. Included with the high inflation and too much government intrusion in the economy, real GDP growth is hindered.

The trend of Brazil unemployment rate is overall declining but also trends a slight growth from 2008 to 2009 during the economic crisis. However, the outspreading of the international financial crisis did not provoke a considerable increase of unemployment, due to several actions that the government took to protect the Brazilian labor market. The proper response to the economic shock by the government brought an identical positive effect to protect the domestic economy. This minimized the influence on Brazil economy, as shown in Table 1(Appendix B8), compared with other emerging countries. Brazil experienced a slight increase in unemployment rate (0-1.5 pp) and a moderate GDP shock (-0.33%). Despite that the GDP has not increased in 2009, in many sectors of economy, a new generation of jobs has been created to boost the recovery.

Beyond the actions taken by the government to retain its GDP growth as mentioned above, the policy of real minimum income to maintain the family and the measures to give incentive to small businesses and entrepreneurs were implemented. This played a big role to avoid worsened labor market situations. Specially, the broadened and sustained credit for exporting companies created many more opportunities to reduce unemployment in the dynamic Brazilian labor market. More so, the unemployment insurance is designed to protecting its workers. As the crisis has not deepened, and several measures are being taken to rapidly overcome it, (Appendix B #9), we can see a clear diminishing tendency in Brazil’s unemployment rates over the years (Brazil economy profile, 2012).

The most recent inflation rate was 6.15% in January 2013. The record high has been 6821.31% in April 1990, which caused a national economic meltdown for Brazil. A record low of 1.65% in December 1998 resulted from the government’s long-term monetary policy and efforts to reduce inflation levels. The average inflation for Brazil from 2008-2012 has been 7.08%, and the average in 2012 has been 5.40% (Appendix A1). While these numbers show a decline trend in inflation, it is still a concerning factor. Since inflation is based on the consumer price index, it is imperative to understand that Brazil’s main components of CPI are food, alcohol, and tobacco, which entail 31% of the total CPI index.

The recent jump in inflation was a consequence of rising food prices indirectly correlated with the recent droughts in Brazil and abroad. This demonstrates a supply shock due to the hostile weather conditions, where the aggregate supply for food and quantity supplied decreased and food prices rose .88% (Appendix A6). Brazil’s high inflation is a major concern of the Brazilian government, and the central bank is continuing to utilize monetary policy and spot currency in order to stabilize inflation. Stronger currency is needed to reduce the cost of imports, and control tax cuts within the Brazilian economy.

Brazil’s increasing interest rates are a leading hindrance in the developing country. The recent incline trend in inflation is directly correlated with the rising lending interest rate, which is defined as the interest rate that banks charge their prime customers through the medium of loans and other short term borrowing funds. Brazil’s real lending interest rate has been fairly high over the years, recording a high of 43.88% at the end of 2012, and record low of 7.3% in October of 2012 ("Trading economics," 2011) and (Appendix A2).

A few rationales have been offered in order to comprehend the high interest rates, which entail Brazil’s relatively lower savings trend, fluctuating liquidity, budget deficits, inflation volatility, and fiscal and monetary policy implications. The constant risk of debt default, which correlates with the high public debt, caused interest rates to soar over the years. Overall, the lending interest rates are proportionally decreasing over time due to the government emphasis on increasing domestic savings; doing so would expectedly cut the inflation rate by 50%.

Brazil’s gross debt remains relatively high in comparison to other emerging economies, and 20% higher than the G-20 average. External debt has been on an incline ever since 2008, before the financial crisis hit and sits at a current $397.5 billion. Whereas, Brazil public debt has been respectively 54.2% of GDP in 2011 and 53.4% in 2010, reflecting a marginal decline. In the macro perspective, the Brazil Government debt has averaged to 69.1% of GDP from 2000 to 2011. External and public debt are vital to take into consideration for investors who directly utilize it to measure the country’s capability of paying its’ future debt payments. This has a direct impact on the country’s borrowing costs as mentioned as well as government bond yields (Jaeger, 2013) and (Appendix A3).

Many have argued there is strong prospect for debt sustainability, if increasing revenues and decreasing government expenditures can diminish government debt. However, there are many contingent liabilities in store for Brazil as the aging population expenditure increases, which would increase government expenditure. According to the government expenditure, Brazil is running a high current budget deficit as of 2012. Hence, Brazil is attempting to reach a structural fiscal balance as said by Economist Mauricio Oreng,

"Broadly speaking, the structural fiscal balance approaches treat revenues more carefully than expenditures. In general, government receipts are endogenous in the short run (i.e., conditioned more by the economic and social environments than by policymaking) while spending is predominantly exogenous in the short run (i.e., chosen by policymakers). Thus, except for discretionary changes in the tax code, revenues tend to play a greater role as an automatic stabilizer, whereas expenditures usually reflect policy decisions".

Generally, Brazil’s debt currently remains beneath investment grade because government expenditure continues to rise and the budget deficit remains.

From the overall tendency in Brazil growth, unemployment, inflation, and debt trends, we conclude that Brazil’s macroeconomic situation is acceptable, in the crisis the Lula government acted in a right manner, which avoided deepening recession. However, the declining GDP growth rate showed an unsatisfying result, which means there has to be a balance between inflation-oriented (which Brazil mainly focused before 2008 crisis) and strategic capital control to avoid appreciation of the Brazilian Real (thus promote economic sectors and country’s real GDP), to pursue a real growth in the long run, and avoid a "jobless growth" in the country economy.

Exchange rate

The Brazilian real is consistently appreciating (above average) for the past 10 years till now at an average of 11% throughout. The local bond market has been responsible to hold the real value up by providing high rate of returns to the investors. Conversely, the negative significance for the Real is the domestic commodities, which is depriving the chance for the Real to go down. The capital flow in recent four years has worsened the pressure associated with exchange rates at 3% of Brazil’s GDP. (IMF – publication 2012)

The result of decline in Brazil’s commodity prices has a huge impact on its currency appreciation because of exporting to China and Europe. Lending less in domestic investments by the public bank leverages this and the influence is huge on exchange rates and international reserves. The flexible exchange rate is enhanced in Brazil when there is a medium impact on primary products (Beef, fish, fuels and Soybean etc.), and on asset prices in response to the intensified Euro area recession with tightened finance. (IMF – publication 2012)

The real exchange rate for Brazil deflates with response to raising the unit labor costs in manufacturing. The effect on exchange rate is higher as of year 2005 till date since the net exports decreases year after year leading to a negative impact GDP. Hence the income per capita increases for Brazilians causes an increase in imports. Brazil’s account deficit, which is caused from importing more commodities, is now (from 2010) being balanced by merchandise which consist of almost 60% of exports. Major parts of Brazil’s exports are made to Europe and that are agricultural products (Fish & raw materials). Being more capitally intensive with relative labor cost, the ongoing pressure with currency depreciation have been controlled by increasing taxes on imported products which would favor industries domestically. The other factor depreciating the exchange rates is low domestic savings. (IMF – publication 2012).

In 2010, Brazil managed equilibrium within the economy by balancing the net exports from the capital inflows and outflows (like portfolio investments). The central bank acts as a main buffer against the liquidity shocks, by requiring banks in the country to hold more reserves, since the country’s saving is poor. The gross national savings for the year 2012 was 17.36%, an increase of .26% from the previous year. Brazil spent more on pension plans and hence the reason for low savings (IMF – publication 2012).

As far as the current account is concerned, Brazil is holding a negative flow in case of investment income, remittances, receipts and goods. From the year 2013 the current account is expected to be -76 billion Real and may lead up to –107.2 billion Real in the year 2017, these projections explain the possibility of a strenuous appreciation in the Brazilian real by surging imports. A reduction in the income payment per capita is expected to reduce the imports by year 2017. In this case, imports are depriving the chances of GDP growth in Brazil (IMF – publication 2012). The depository institutions are doubling their financial assets about 180% of the GDP with substantial concentration in banking, capital markets and insurance. With high interest rates for government bonds and high demand for the Brazilian real, an appreciation of the currency is occurring.

Trade policies

Recently, Brazil has discovered the offshore oil and this is expected to have some industries shifted towards these places. Brazil compared with external economies has a wealth in minerals and runs industries based on steels and iron. Brazil also has a comparative advantage in its agricultural industries. The incrementing factor for Brazil’s trade is that the export of computer, communications and other services which contributed around 58.1% of commercial exports for past 11 years. The export of food is around 28%. The decrementing value in the trade is that the import of communication devices is around 51%, 26% of imports over travel and 18% on fuel imports over 11 years.

After the year 2007 the imports have increased tremendously and hence there is a drop in the net exports of about 50%. The savings are poor but still the government is making policies that encourage private savings. The domestic investment (energy, transport, water) is now relatively higher as compared to the year 2000. Additionally the foreign direct investments, on bonds, contribute a large amount, because of high returns. Brazil is one of the top most countries with high credit lending rate and it is about 42%, this is because of the trade surplus for past few years, creating capital outflow.

The taxes on international trade are less as compared to taxes on income and on goods & products in the domestic market; this means that the country is promoting the exports more but still the increase in imports exists. Hence, there is a need to increase tax over imports which would help budgeting, and can help the government pay off debt obligations.

Mercosur (Argentina, Brazil, Venezuela, Paraguay and Uruguay) is the common market for South America and middle eastern countries geared towards the commitment of free trade and liquid movement of goods, people and currency. Brazilian and Argentine countries invested about $1 billion in early days for joint-venture of 350 companies to increase trade by20%. Components and sub-assemblies of motors were subsequently re-exported to Brazil from Argentine. Once Brazil exported 25% of its total exports to Argentina among the following sectors of automobile, farm-based commodities and food, oil, petrochemicals, electricity, finance (by joint-venture of insurance company with Brazilian real). The scope of Brazil’s trade with Mercosur is likely to expand more; around 30% is expected when the obstacles such as trade restrictions, poor structures and cross-border delays are overcome (or negotitate) by the government. Brazil’s electricity, which is produced from hydroelectric plants, is for cheap cost, especially during rainy days and these are exported to Mercosur countries contributing 9% of Brazil’s export. (Proquest - Brazil/Mercosur)

Conclusion and Recommendations:

Brazil’s economic profile is hallowed by immense prospective potential with regards to consumer confidence, oil discoveries, decreasing unemployment rates, Olympic Games, and investment in the huge domestic market. With the up and bringing middle class, opportunities lie in expansion of labor force, education and increased tourism. This in return would elevate standard of living and alleviate poverty and corruption, and reduce the income gap within society.

By maintaining an expansionary monetary policy, Brazil has the capability of lowering its’ inflation and interest rates, in order to achieve a larger real GDP, while attracting foreign investment. An increased investment on infrastructure would contribute to the real economic growth by increasing GDP. However, there are vast areas for improvement that can expedite the process of this emerging economy. For example, Brazil should increase taxes on imported products for citizens, which would ultimately reduce the imports and create a trade surplus, converting to a positive current growth. Inclusively, Brazil has mass potential to become one of the leading economies of the world, and prospectively the leading economy in South America.

Appendix A

Graphs And Exhibits:

#1

Brazil Inflation Rate

 

 

 

 

 

 

Year

2008

2009

2010

2011

2012

Value

5.70%

4.90%

4.90%

6.60%

6.22%

#2

Brazil Lending Interest Rate

Year

2008

2009

2010

2011

2012

Value

47.25%

44.65%

39.99%

40%

43.88%

#3

External Debt in millions of $

Public Debt

Year

Debt

2008

229.4

2008

36.9

2009

262.9

2009

59.5

2010

273.7

2010

60.8

2011

310.8

2011

54.2

2012

397.5

#4

#5

#6

(n.d.). Retrieved from http://en.wikipedia.org/wiki/File:Economics_supply_shock.png

Appendix B

#1

#2

#3

#4

Brazil sectors of employment (agriculture, industry, services)

#5

#6

#7

#8

#9

Appendix C:

Appendix D:

Exhibit #1

Chart created with extracted data from:

http://www.areavibes.com/brazil-in/demographics/, http://www.indexmundi.com/g/g.aspx?v=31&c=br&l=en

Exhibit #2

Chart created with extracted data from: http://www.indexmundi.com/brazil/demographics_profile.html

Exhibit #3

Chart created with extracted data from:

http://www.tradingeconomics.com/brazil/urban-population-wb-data.html

Exhibit #4

Chart created with extracted data from:

http://www.marketresearch.com/seek/Demographics-Brazil/81/1384/1.html

Exhibit #5

Chart created with extracted data from:

http://www.tradingeconomics.com/brazil/urban-population-wb-data.html

Appendix E:

Oil exporting Giants:

And

Gross Investment:

Taxes collected for budgets:

Mircosur trade performance among countries:

C:\Users\Lingesh\Desktop\Mercosur _Brazil.jpg

Appendix F: Scott

#1

#2

Cited References:

CIA. (2013). The world factbook

FRED. (2012).

Global-rate.com . (2013).

Superintendencia da Zona Franca De Manaus © (2004)

Tw.18dao.net(2006) Natural resource in Brazil

Yung chien,C. (2012 30-7). The market in Brazil.

Association Keynesiana Brasileira (AKB). (n.d.). Retrieved from http://www.akb.org.br/upload/130820120841229179_Ana%20Rosa%20Ribeiro%20de%20Mendon%C3%A7a.pdf

Brazil population. (n.d.). Retrieved from http://www.indexmundi.com/brazil/population.html

DoiSerbia. (n.d.). Retrieved from http://www.doiserbia.nb.rs/img/doi/1452-595X/2011/1452-595X1105693M.pdf

The Global Labour University (2010). An economic analysis of unemployment in Brazil. Retrieved from http://www.global-labour-university.org/fileadmin/GLU_conference_2010/papers/65._An_Economic_Analysis_of_Unemployment_in_Brazil.pdf

World Bank Search (n.d.). Brazil monetary growth. Retrieved from http://search.worldbank.org/data?qterm=brazil%20monetary%20growth&language=EN

World bank. (2012). Economic Indicators. Retrieved from http://data.worldbank.org/indicator/SP.DYN.LE00.IN

World Bank. (2009). The world bank. Retrieved from http://data.worldbank.org/indicator/SP.DYN.TFRT.IN

World Bank. (2011, march 30). Bra-aag.xls. Retrieved from http://devdata.worldbank.org/AAG/bra_aag.pdf

World Bank (n.d.). Household final consumption expenditure, etc. (% of GDP) | Data | Table.Data | The World Bank. Retrieved from http://data.worldbank.org/indicator/NE.CON.PETC.ZS

World Bank Search. (n.d.).  Brazil employment by sector. Retrieved from http://search.worldbank.org/data?qterm=brazil+employment+by+sector&language=EN&format=

World Bank Search. (n.d.).  Brazil employment by sector. Retrieved from http://search.worldbank.org/data?qterm=brazil+employment+by+sector&language=EN&format=

WSJ.com. (2011) Brazil Unemployment Rate Falls To Record Low In Dec, 2011. Retrieved from http://online.wsj.com/article/BT-CO-20120126-706115.html

Trading economics. (2011, NOV). Retrieved from http://www.tradingeconomics.com/brazil/interest-rate

Interest rates. Retrieved from http://data.worldbank.org/indicator/FR.INR.LEND

Biller, D., & Soliani, A. (20.7). Bloomberg. Retrieved from http://www.bloomberg.com/news/2012-07-20/brazil-inflation-unexpectedly-jumps-ending-downward-trend-1-.html

Inflation brazil 2012. (2012). Retrieved from http://www.inflation.eu/inflation-rates/brazil/historic-inflation/cpi-inflation-brazil-2012.aspx

Biller , D. (2013, February 07). Brazil central bank says inflation high as bond bids spurned. Retrieved from http://www.businessweek.com/news/2013-02-07/brazil-central-bank-says-inflation-is-high-requires-attention

Brl- brazilian real. (2011). Retrieved from http://www.xe.com/currency/brl-brazilian-real

Frenkel, R., & Rapetti, M. (2010). Retrieved from http://www.cepr.net/documents/publications/exchange-rates-latin-america-2010-04.pdf

Vargas, F. (17, December 20). Brazil. Retrieved from http://observingbrazil.com/2011/12/28/brazils-productivity-gap/

Historical data graphs per year. (n.d.). Retrieved from http://www.indexmundi.com/g/g.aspx?c=br&v=94

Soliani, A. (28, ). Bloomberg. Retrieved from http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOdNPVbCSI90&refer=latin_america

Jaeger, M. (2013). Brazil – government debt is declining, or is it?. Retrieved from http://www.dbresearch.com/servlet/reweb2.ReWEB?document=PROD0000000000289216&rwnode=DBR_INTERNET_EN-PROD$NAVIGATION&rwobj=ReDisplay.Start.class&rwsite=DBR_INTERNET_EN-PROD

(November 24, 2009). Bets rise on rich country defaults. http://theautomaticearth.blogspot.com/2009/11/nove mber-24-2009-bonds-herds-and-game.html

http://www.itau.com.br/_arquivosestaticos/itauBBA/contents/common/docs/ITAU_Working_Paper_6_Fiscal_1.pdf still have to CITE

Adam, K. (2010). Brazil is booming, but real is in trouble. Retrieved from http://www.forexblog.org/2010/05/brazil-is-booming-but-real-is-in-trouble.htm

Brazil invites private sector to invest in new highways and railways plan. (n.d.). Retrieved from http://en.mercopress.com/2012/08/16/brazil-invites-private-sector-to-invest-in-new-highways-and-railways-plan

(n.d.). Retrieved from http://en.wikipedia.org/wiki/File:Economics_supply_shock.png

Tourism in brazil. (n.d.). Retrieved from http://en.wikipedia.org/wiki/Tourism_in_Brazil

Blankfeld, K. (2010, December 13). Forbes magazine. Retrieved from http://www.forbes.com/sites/kerenblankfeld/2010/12/13/is-brazils-economy-getting-too-hot/

http://latino.foxnews.com/latino/news/2012/08/15/brazil-looks-to-private-sector-to-bolster-infrastructure/#ixzz2LITjSiOg STILL HAVE TO CITE

Mapsofworld.com. (2011, 09 24). Retrieved from http://www.mapsofworld.com/brazil/information/natural-resources.html

Despite slowing economy, brazil's unemployment still seems to trend downward. (July, 2012 24). Retrieved from http://www.clearonmoney.com/dw/doku.php?id=investment:commentary:2012:06:24-despite_slowing_economy_brazil_s_unemployment_rate_still_seems_to_trend_downward

Williams, S. (2011, April). Retrieved from http://ebook.law.uiowa.edu/ebook/uicifd-ebook/why-brazil-emerging-market-economy

Ganaderia Mexico (2011). Forget About Brazil's Strengths, Let's look at its Weaknesses; from: http://ganaderiamexico.blogspot.com/2012/05/forget-brazil-strengths-let-look-at-its.html.

Gartlan K. & A. Stewart (2011). Forget About Brazil's Strengths, Let's look at its Weaknesses;from:http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/news/template1&paneContentId=5&paneParentId=70104&product=/ag/news/topstories&vendorReference=81adb8a8-9bec-43c0-ac3c-07dea59a884d.

Winter B. (2012). Factbox: Brazil's Economy: Five Strengths and Weaknesses (2012, December 3) Yahoo Newscast. Retrieved on February 20, 2012, from ABI INFORM/GLOBAL.

Burlandi L. & Maluf R. (2007, September). Poverty, Inequality and Social Policies in Brazil. Poverty, Equity, and Income Transfer Programs, 9-12, from EBSCOhost.

Nicholson B. (2012, May, 29). "Big Monthly" expenses failing in Brazilian Political System. International Bar Association. Retrieved on February 18, 2012, from: http://www.ibanet.org/Article/Detail.aspx?ArticleUid=26ffac5e-c460-482f-9365-7d7309d8df17

Hagopian F. & Mainwaring S. (1987, September). Democracy in Brazil: Origins, Problems, Prospects. Working Paper #`100, Kellogg Institute, from: EBSCOhost.

Hardy D. (2009, October, 27). Strengths and Weakness of Brazil. International Cociousness: What's your International IQ. Freshman Wordpress, from: