NS4540 Winter Term 2019 Brazilian Economy Overview Europa brazil economy

Macroeconomic Trends

Brazil Strenghts/Weaknesses

Brazil: Governance Trends

Brazil: Economic Freedom Trends

Brazil: Recent Growth Patterns

Brazil GDP Forecast

Brazil Fiscal Deficit/Debt

Brazil: Economic Size

Brazil: Population

Brazil: Unfavorable Demographics

Brazil: Service Based Economy

Brazil: Limited Openness

Brazil Minimum Wage

Brazil Labor Productivity

Brazil: FDI

Brazil: Poverty Decline

Brazil Unemployment

Brazil: Income Distribution

Overview I Brazil is the sixth largest economy in the world The world’s second largest emerging market Agricultural production and export of raw materials has historically played a prominent role in Brazil’s economy However Brazil was one of the earliest industrial powers in Latin America Coffee production in Brazil in the 19th century resulted in concentration of income in hands of Sao Paulo landed Class They favored a more diverse investment portfolio Coffee profits went into transportation and other industrial and commercial enterprises

Overview II Young industries received further boost from interruption of trade during First and Second World Wars – protection Early as 1947 manufacturing sector had displaced agriculture as country’s principle sector However manufacturers did not comprise a significant proportion of Brazilian exports until last quarter of 20th century Although initially dominated by resource-based products– processed foods composition of exports has shifted reflecting technological upgrading of national industries Sophisticated heavy manufacturers Telecommunications Automobiles and aircraft

Overview III As with many countries, consistent economic growth and macroeconomic stability has eluded Brazil, especially in 20th century However by the first decade of the 21st century Brazilian economy was growing at a record pace of 4.5% per year This economic growth has been accompanied by equally remarkable improvements in living standards and significant achievements in socio-economic areas Poverty reduction Improved literacy Increased life expectancy

Overview IV These advances in area of human welfare stem from foundation in basic health and education that was constructed in period on inward growth in mid 20th century -- especially Plan of President Vargas (1930-45) for industrialization, and The intensive social welfare programs – Bolsa Familia initiative during 1990s and early 2000s Shift in Brazilian economic paradigm from inward looking, state-led model of growth – characteristic of region in mid-20the century Prompted by chronic and hyperinflation from 1980s into the early 1990s

Overview V Hyper inflation generated political capital needed to push through market-oriented reforms Initiated under President Collor de Mello (1990-92) and Strengthened under President Cardoso (1995-2002) Dissatisfaction with fiscal austerity and income and social inequality grew culminating with Lula de Silva in 2002 and 2006 and Dilma Rousseff in 2010 and 2014 Concerns that Lula and Rousseff administrations would reverse market-friendly policies proved unfounded Pragmatism has increasingly characterized Brazil economic policy making regardless of underlying political ideology

Overview VI Brazil’s economy in 21st century could be described as Hybridization of interventionist and free market approaches made possible by Brazil’s large market size Policy framework has elements that are both export-oriented and foreign investment friendly Also inward looking and protective of domestic industries. Fiscal policy favors counter-cyclical stimulus measures But with a concern for inflation and the exchange rate. Economic growth is regarded as the means to social ends Broader access to better education and health Reduction in poverty and destitution and Environmental protection and conservation

Overview VII Record prices world markets for primary commodities led to an abundance of foreign reserves in Brazil in 2004 Gave fiscal and monetary authorities enormous policy space Even when global markets were ensnarled by financial crisis in 2008 growing domestic consumer market made it possible for fiscal authorities to delay the immediate effects of the external shock and maintain spending priorities However, the confluence of a protracted recovery of global markets falling world commodity prices, and worsening macroeconomic conditions Pressing government towards greater fiscal restraint after four years of economic stimulus measures.