brazil - economic analysis
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By:Adrita Bagchi
Aishwarya JainJahnavi GhelaniShweta Varma
Vidhi Jain
DEVELOPMENT EXPERIENCE
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BRAZIL
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STRUCTURE OF BRAZILIAN ECONOMY UPTO 1980
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1500
1700 1807 Early 1930
Late 1930
Early 19501957-62
1968-731974-80
18221840 -1930
TIMELINE
1945-47
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1500 Colonized by PortugalSugar first major export product.Cattle industry developed
1700 Precious metals discovered.
1807 Napoleon occupied Portugal
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1822Independence achieved.Population – 3.9 millionCoffee accounted for 19% of total exports in 1821-30 which
increased to 63% in 1891.
Year Decadal coffee exports (1000 bags each of 60 kg)
1821-30 3178
1831-40 10430
1841-50 18367
1851-60 27339
1861-70 29103
1871-80 32569
1881-90 51631
Source: Prada Junior, Historia, p.160
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1840-1930Tariffs increased reaching an average of over 30% in 1844.
Rubber exports rose from an annual average of 6000 tons in 1870s to 21000 tons in 1890s.
Cotton exports rose by 73% in 1850-1900.
Irregular expansion of light industries.
Average yearly growth of industrial output fell from 4.6% in 1911-20 to 3% in 1920-29.
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Early 1930Exports fell from US$445.9 mn in 1929 to US$180.6 mn in
1932.Decline in coffee economy and an an excess capacity of coffee
production created in the 1920s. Terms of trade fell by 50%.Value of imports to decline from US$416.6mn in 1929 to
US$108.1 mn in 1932.Change in the role of government
Late 1930Output increasedSteel capacity grew with appearance of small firms but there
was little industrial and infrastructure investment.
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1945-1947 Trade liberalization was short-lived.
Industrial production grew at an annual rate of 5.4% in 1939-45.
In 1945, No quantitative restrictions on imports and forex freely available for most capital transactions.
Early 1950 the government adopted an explicit policy of import-substitution
industrialization.
in 1953 a more flexible, multiple-exchange-rate system was introduced.
Imports and most exports were retained in the official market and controlled by the CEXIM (export-import dept of the Banco do Brazil)
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1957-1962government enacted the Tariff Law of 1957.
Advalorem tariffs increased to 150%.
the average annual rate of growth of the GDP exceeded 7%.
the structure of the manufacturing sector experienced considerable change.
In 1962, phase of intense import substitution, especially of consumer goods, with basic industries growing at significant but lower rates.
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1968-1973the average annual rate of growth of GDP jumped to 11.1%,
led by industry with a 13.1% average.personal income became more concentrated and regional
disparities became greater.Brazil suffered drastic reductions in its terms of trade as a
result of the 1973 oil shock. the price of petroleum quadrupled . Country’s import bill rose and trade balance changed from a
slight surplus to a deficit. Current account deficit increased.the rate of inflation had declined steadilyGovernment expenditure as a proportion of GDP increased
from 17.1% in 1947 to 22.5% in 1973.
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1974-1980In 1979, a economic package was introduced which included
maxi-devaluation of the currency by 30%, elimination of tax incentives and export subsidies among others.
Between 1974 and 1980, the average annual rate of growth of real GDP reached 6.9 percent and that of industry, 7.2 percent.
The foreign debt rose from US$6.4 billion in 1963 to nearly US$54 billion in 1980.
Since 1973, a upward trend of inflation began. The rate more than doubled from 1973 to 1974, and was in the 30-48% range in the next 4 years. It doubled again in 1978-79 and crossed the 100% mark in 1980.
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JAHNAVI
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Change in Structure of Economy
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The Plano real
THE SECOND PHASE
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Socio economic policiessix key policy goals price stabilityefficiency of the taxation Systemprovision of long-term financeinvestment in research and developmenteducation of the workforce selective investments in infrastructure
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enacted a series of contractionary fiscal and monetary policies
restricting its expenses raising interest rates
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Govt’s macroeconomic policiesachieved through tight controls of growth in
expenditures Vigor in generating revenuesThroughout the first half of 2003 interest rates were
kept at very high levels as the Lula government continued its policy of reassuring the international community.
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Discovery of Tupi oilfields.The discoveries have made Brazil one of the world's
top 10 oil producers.
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ECONOMIC OVERVIEW OF BRAZIL SINCE 2002
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Brazil has become the sixth-largest economy in the world.
The economy grew at 2.7% last year.The Brazilian economy is now worth 2.5 trillion
dollars (£1.6 tn).
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In 2010 the Brazilian economy expanded by 7.5%.While it slowed to expected growth of 3.5% in 2011, this was caused by external factors, primarily the financial crisis in the Eurozone hitting the wider economy.
The currency, Brazilian real, fell 11% against the US dollar last year. That is after two years of huge gains - up 5% in 2010 and 34% in 2009.
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GDP GROWTH RATE OVER THE YEARS
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However, the country still struggles with inequality. The country's Gini coefficient, a measure of income inequality, peaked at 0.61 in 1990 - but 2010's figure was a historic low of 0.53.
There has been a rise of a new middle class, whose purchasing power has been fuelling Brazil's continuous economic growth amid declining industrial output and weak global economic activity
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The country’s interest rates are among the world’s highest for a large economy. Currently Brazil is changing this policy and has cut its interest rates seven times in the past year to a record low of 9%.
With substantial oil and gas reserves continuing to be discovered off Brazil's coast in recent years, the country is now the world's ninth largest oil producer, and the government wishes to ultimately enter the top 5.
Brazil is today the world’s third-largest exporter of agricultural goods.
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MACROECONOMIC INDICATORSGDP (current US$) - 2.4 trillion dollars
Income level - Upper middle income
Per Capita Income – US$ 11,500
Exchange rate - 1 Brazil real (BRL) = 0.492053 U.S. dollars or 1 USD = 2.032 BRL
Current interest rates – 8.5%
Inflation rate – 4.92%
Population – 195 million
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Referenceshttp://www.mapsofworld.com/brazil/economy/
history.htmlhttp://www.bbportuguese.com/economic-history-of-
brazil.htmlThe Brazilian Economy by Werner Baerhttp://data.worldbank.orgWorld Bank data 2012 http://www.oecdobserver.org/news/archivestory.php/
aid/1582/Brazil_92s_Economy.htmlhttp://www.bbc.co.uk/news/businesshttp://www.business.illinois.edu/Working_Papers/
papers/05-0108.pdf
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THANK YOU