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An Overview of Brazil’s Economy

An Overview of Brazil’s Economy. February 1 st , 2012 Team Itaú : Shivani Arora Colleen Butts Lakshmi Gupta Spencer Jones. AGENDA. Overview Major Economic Sectors Economic History Strengths and Weaknesses Political Influences Outlook. CURRENT SNAPSHOT. PRIMARY EXPORTS.

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An Overview of Brazil’s Economy

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  1. An Overview of Brazil’s Economy February 1st, 2012 Team Itaú: ShivaniArora Colleen Butts Lakshmi Gupta Spencer Jones

  2. AGENDA • Overview • Major Economic Sectors • Economic History • Strengths and Weaknesses • Political Influences • Outlook

  3. CURRENT SNAPSHOT

  4. PRIMARY EXPORTS Value = $199.7 billion • Transport Equipment • Iron Ore • Soybeans • Coffee • Footwear *Based on 2010

  5. PRIMARY IMPORTS Value = $187.7 billion • Machinery • Electrical and Transport Equipment • Chemical Products • Oil *Based on 2010

  6. AGRICULTURAL SECTOR • GDP: 6.1%, Labor Force: 20% • Sugarcane, Coffee, Soybeans • Cattle: 1.1 Million Tons (2011), $4.8 Billion Revenue • Issues: Greenhouse Gas Emissions, Deforestation and Water Pollution

  7. INDUSTRIAL SECTOR • GDP: 28%, Labor Force: 14% • Manufacturing: Steel, Machinery, Automobile Parts, Aircrafts, Chemicals, Consumer Durables • Mining: Nickel, Tin, Zinc • Mineral Resources: Iron and Manganese • Hydroelectric Power: 69%, 77,000 megawatts • Biofuel Production and the United States

  8. SERVICE INDUSTRY • GDP: 67.5%, Labor Force: 66% • Banking: ItaúUnibanco, Banco Bradesco, Bank of Brazil • Telecommunications, Energy Commerce, Computing

  9. BRAZIL‘S ECONOMIC TIMELINE • Sweeping changes • Political & Economic • 1930 revolution: Old Republic abolished • New State dictatorship • Spectacular Growth • GDP growth rate jumped to 11% • External trade expansion • 1973 Oil shock • Hyperinflation to Stabilization • Bankruptcy leading to a stabilization plan • Political instability 1950s 1960s 1970s 1980s 1990s 2000s - Now • Stagnation & Industrialization • Import substitution of consumer goods • Rapid growth for manufacturing post 1964 • GDPgrowth rate down to 4% • Economic powerhouse • End of inflation • Rise of consumerism • Growth of 7.5% in 2010 • Lula Silva’s rise to power • Stagnation, Inflation and Crisis • More oil-shocks • Economic decline: IMF control: inflation at 5000% • Termed “lost decade”

  10. PLANO REAL • Measures Taken to Stabilize Economy in 1994: • New Fiscal Strategy – privatization of State companies • Monetary Reform – created an index URV, and plural reasis became new currency • Opened up economy to international investors

  11. STRENGTHS • Largest Recipient of FDI in Latin America • Global Leader in Science and Technology • Advanced Industrial Sector • Exports: Natural Resources, Agriculture • No longer dependent on foreign oil

  12. WEAKNESSES • Poverty • Domestic Debt • Inequality

  13. CURRENT ECONOMIC ISSUES • External Shocks • FDI and over-speculationcould cause bubbles • Interest rate adjustments • Risk of “bad equilibrium” • Exchange rates and the appreciated real • Corruption

  14. SECTOR-SPECIFIC ECONOMICSs • Industry vs. Emissions • Agriculture and Energy vs. Deforestation • Meeting Brazil’s energy demands

  15. OUTLOOK • Tighter monetary and fiscal policy • Inflation continues to be an issue • Strong economic recovery following global recession

  16. RESOURCES http://www.economywatch.com/world_economy/brazil/industry-sector-industries.html http://www.state.gov/r/pa/ei/bgn/35640.htm#econ http://www.guardian.co.uk/environment/2009/nov/10/brazil-emissions http://www.bloomberg.com/news/2011-12-23/brazil-s-top-banks-tighten-grip-on-loans-as-yields-soar-for-small-rivals.html http://www.gfmag.com/gdp-data-country-reports/311-brazil-gdp-country-report.html#ixzz1krfqM9gQ http://www.state.gov/r/pa/ei/bgn/35640.htm http://www.bbportuguese.com/economic-history-of-brazil.html http://www.thedailybeast.com/newsweek/2001/09/03/the-nerd-who-saved-brazil.html http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil http://internationalbusiness.wikia.com/wiki/Brazilian_Economic_Systems_Strengths/Weaknesses https://mninews.deutsche-boerse.com/index.php/sp-brazil-well-prepared-smooth-out-external-shocks?q=content/sp-brazil-well-prepared-smooth-out-external-shocks

  17. RESOURCES • http://www.americasquarterly.org/node/3255) • http://online.wsj.com/article/BT-CO-20120123-706648.html) • http://www.bloomberg.com/news/2011-09-12/brazil-economists-see-faster-inflation-slower-growth-after-rate-reduction.html, http://mrzine.monthlyreview.org/2011/bp311211.html • http://www.washingtonpost.com/business/brazilian-tourists-spend-a-record-amount-of-dollars-abroad/2012/01/24/gIQAqWRXNQ_story.html • http://www.tradingeconomics.com/brazil/current-account, http://www.france24.com/en/20110708-brazil-accuses-china-us-over-currency-policy • http://www.businessweek.com/news/2012-01-20/brazil-futures-yields-decline-as-central-bank-signals-more-cuts.htmlP • http://en.mercopress.com/2011/09/20/brazil-sponsors-forex-anti-dumping-import-barriers-to-compensate-us-dollar-devaluation • http://www.econ.puc-rio.br/gfranco/How%20Brazil%20Beat%20Hyperinflation.htm

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