Brazil’s Economic Analysis for Business

Introduction

Brazil has an annual gross domestic product growing at the rate of 5% and this makes it one the fastest developing country in the world in terms of the economy (Waddell, 2004). The gross domestic product of Brazil was projected to the tune of 2.9 trillion using the Brazilian currency called the reais. In the years ahead the economy of Brazil is forecasted to become the fifth largest economy globally. It overcame Russia for the very first time. Brazil has resumed its place as leader of world growth and it has comfortably followed very practical policies regarding monetary and fiscal sectors than what Japan and the United States have been able to put in place, and most of the developing countries (Shuman, 2007). It owns a satellite launching center; furthermore, Brazil is the only nation that lies in the northern hemisphere that integrated the team which constructed the international space station and it had pioneered many productions which include the production of ethanol and the research of deepwater oil fields. With a population of over 190 million, Brazil has abundant deposits of natural resources. This country is ranked tenth among the largest markets in the globe. It produces millions of tons of steel, around twenty-six million tons of cement among other things. Brazil’s service sector is the biggest contributor of its gross domestic product standing at 68% then the industrial sector follows at 29.7%. (National Library of Australia, 2001).

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Factors influencing the economy of Brazil

Agriculture

Despite the trade barriers that were created by the developed nations and the subsidizing policies, Brazil has managed to perform distinctively in agribusiness as far as the trade balance is concerned. In the 1950s the population of Brazil was around 50 million and by 2005 It had shot up to about 187 million, this was a reason enough for it to develop and support its agriculture sector. For Brazil to meet this growing demand it had to double its effort on cattle development and crop cultivation. This revolution, however, had some repercussions on the environment especially the Amazon (Kotelnikov, 2010).

To improve this sector radically, Brazil through specific programs focusing on family agriculture had to be put in place (Barger, 2004). This program guaranteed the finance required to obtain equipment and tools for cultivation, furthermore, relentlessly encouraging the farmers to make use of the new technology available. Over eight hundred thousand of the rural populations are being assisted by the credit offered, the research, and through extension programs. (McConnell, 2003).

Brazil divided 600,000 km2 of its land into about 5000 areas. This rural property, which is a fertile agricultural area, is further divided into three key regions: the central-western region mainly savanna, the northern region which is the area of transition, and lastly the northeastern region which is mostly semi-arid (Storey, 1996). The soybean is the leading producer with over 100 million tons every year and this makes it the world’s leader in soybean exportation, coming second is the breeding of bovine cattle and is raised in pastures and on a diet consisting of hay and mineral salt, it yields over fifty million tons. The cattle market is in Asia, Europe and America. With over 198 million heads of cattle, Brazil is the world’s leader in cattle breeding.

Brazil is the pioneer and the leader in the field of manufacturing short fiber cellulose of timber. This Latin nation produces 25% of the world’s demand for refined sugar and raw cane. (Fletcher, 2009).

Energy sector

Earlier Brazil’s 70% of its oil was from importation but by the year 2006, this lovely country became independent as far as energy is concerned. (Stenzel, 2007). Hydroelectric power covers eighty percent of the electricity demands in the country. Hydroelectric power is supplied through several dams such as the Itaipu dam situated on the Parana River is the world’s biggest dam that supplies about fifteen thousand, nine hundred megawatts (Gordon, 2007).The Tucurui dam situated in para.. In 2002, The country was able to Finnish its 2nd nuclear reactor hailed as Angra II in addition, Angra III is anticipated to be complete by 2014. These 3 nuclear reactors will have a joint output of nine thousand megawatts. It did not stop at that since the government of Brazil plans to construct 17 more of these reactors (Durant, 2006).

Industry sector

Amongst the nations in South America, Brazil has been able to be the second principal country in the industrial sector. Brazil’s increased stability of the economy was provided by the Plano Real. Local and some multinational organizations have heavily invested in technology and new equipment (Johnsons, 2002).

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In the service industry focusing mainly on the banking sector accounts for as much as 16% of GDP. Its financial industry is undergoing a necessary overhaul to be efficient, but still, it provides the local enterprises with a wide variety of products (Darbishire, 2010).

Brazil has proven mineral deposits of iron, manganese which are important in the manufacture of earrings, uranium, nickel, bauxite, beryllium, tungsten among others. In addition, it has deposits of cooking grade coal of high quality (Cameron, 2010).

Measures and control

Among actions newly implemented in line to balance the economy, the country executed changes to its Social security and Tax systems (Stephenson, 2009).

. These changes brought with them a significant addition (Thorne, 2006). A Law of Fiscal Responsibility which manages public spending by the Executive Branches at all levels of government. Similarly, savings were done through management effectiveness and procedures that were formed to promote all factors of trade. Thus presenting opportunities for financiers (Cebrowski, 2003)

With these modifications, Brazil has been able to reduce its liability. It does not import petroleum and has gone ahead to halve its domestic balance through exchange rate-coupled certificates and has realized a rise in its exports. By around twenty percent annually. The exchange rate does not have a detrimental influence on the industrial sector. This aspect reduces the chances of the country suffering any liquidity crisis. This has resulted in a positive balance of accounts after twelve years of undertaking the reforms. The world economic crisis has hence had a minimal effect on the economy (Basslin, 1990)

Consistent policies

Sustenance of the productive segment of the economy has been made simpler at all levels. This is done through dynamic and autonomous Congress with collaboration from Judiciary. These collaborations analyze and assess rules and regulations. The major actions taken to rouse the economy are the cutbacks of up to thirty percent on Manufactured Products Tax (IPI), and the savings of eight billion dollars on logistical fleets, thus developing allotment of transportation means. Additionally, assets promise the spread of commerce (Bass, 2003).

Conclusion

In Brazil, union leaders have supervised a remarkable era of societal and economic evolution. It is one of the minority countries that have been successful in managing to lessen economic disparity at a period when in all places else the aspect is becoming worse. Consecutive governments, of challenger l parties, have thrived in developing all sectors of the economy (Dennilson, 2009).

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After enjoying a period of strong growth over the better part of the 1990s, the economic performance of Brazil started slowing down in 2000. By 2001, it had entered a recession. Afterward, in three years, with the end of the period being mid-2003, the economy suffered a below-trend growth period, which was also characterized by an increase in the unemployment rate. However, the economic performance of Brazil hit a steady recovery path in the second quarter of 2003 and displayed a strong growth rate. During this period, a projection of an average growth rate of real GDP of 5.2% per year was given from 2004 to 2014, with the GDP expected to top $14.7 trillion in terms of chained 2000 dollars by the year 2014. However, the economic crisis of 2008, which reached global proportions, changed these projections for the worst. (Basslin, 1990).

The official unemployment rate of Brazil hit 6% in 2009, and the 2010 outlook is that it is set to remain at this level or even go higher. (Cebrowski, 2003). There is growing concern that although this turnout is already a grim indication of the severity of the unemployment problem in the country, the problem is much worse than it is thought to be. The national body in charge of statistics which is in charge of producing the related statistics considers the long-term unemployed to be the people who have been out of employment for a period longer than six months. These people now make up at least 20% of all unemployed Brazilians, which indicates that not less than six million citizens have been out of employment since the summer of 2009. (Cebrowski, 2003). Even comparisons with similar historical events do not make the situation any better, because the last time Brazilians contended with the unemployment problem was through the past recession when the unemployment rate hit 10%. However, since the rate is now much higher, the situation is that it takes twice as long to find a job as it did during the recession. It is chilling to note that this is more than 20 weeks. This is what many unemployed citizens are facing, as the benefits of unemployment run out before they can find the next job. (Cebrowski, 2003).

As we enter the second quarter of 2010, every indication is that economic growth is likely to be less than vibrant, but constant. Thus a longer projection forecast reveals that low inflation rates, low-interest rates, and moderate growth rates are likely to characterize the economic performance of the country over one year. This projection is based on the historical observation that deep recession periods have been typically succeeded by strong recovery periods. If this observation holds, then it is highly likely that a strong recovery period will characterize the growth of the economy.

In conclusion, a review of the economic outlook of the country. is that economic growth will decelerate in the second half of 2010, while inflation rates are not expected to go any lower. The projection for the treasury note over 10 years is that a decline in yields will be experienced during the second half of 2010, followed by a rise in rates in 2011, albeit at rates lower than consensus expectations.

List of References

Barger, D. G. (2004) It is time to transform, not reform, U.S intelligence. [Electronic version]. SAIS Review, 24, No. 1, Web.

Bass, B. (2003) Economic Outlook of Brazil. Public Administration Quarterly, spring, 112-121.

Basslin, G. (1990) From transitional to transformational leadership: Learning to share the vision, Organizational Dynamics, winter, 1990. pp 140-148.

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Cameron, T. (2010) Business management: corporate management, people and change: VCE units 3 & 4. Sydney, Macmillan Education Australia.

Cebrowski, A. (2003). Network-centric warfare and transformation. Speech on January 22, 2003.

Darbishire, O. (2010) Converging Divergences: Worldwide Changes in Employment Systems. London, Cornell University Press.

Dennilson, J. (2009) Brazil: The Rising Giant. New York, CRC Publishers.

Durant, F. (2006). Networking in the shadow of hierarchy: From forward to backward mapping. Presentation at the NAMSHPD Research Institute’s change management meeting, Alexandria, VA: NASMHPD Research Institute, Inc.

Fletcher, P. (2009) Brazil: The booming Giant. New York, UNSW Press.

Gordon, M. (2007) Contemporary chief information officers: management experiences. New York, Idea Group Inc (IGI).

Johnsons, B. (2002) Innovation and Economy. Oxford: Oxford University.

Kotelnikov, V. (2010) Genesis of Change. Perth, Ocean View Publishers.

McConnell, J. (2003) Objectives and Management of the Brazilian Economy. Perth, Macmillan Education Australia.

National Library of Australia. (2001) APAIS, Australian public affairs information service: a subject index to current literature. Australia, National Library Australia.

Shuman, M. H.(2007) How Local Businesses Are Beating the Global Competition. London: Berrett-Koehler Publishers.

Stenzel, J. (2007) Lean accounting: best practices for sustainability. London: John Wiley and Sons.

Stephenson, P. (2009) Organizational Behavior.13th ed. U.S. Pearson Prentice Hall.

Storey, J. (1996) Blackwell cases in human resource and change management. California, Wiley Blackwell.

Thorne. H. (2006) Management accounting: information for managing and creating value. New York, McGraw-Hill.

Waddell, D. (2004) E-business innovation and change management. New York, Idea Group Inc (IGI).

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