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

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Presentation on theme: "An Overview of Brazil’s Economy February 1 st, 2012 Team Itaú: Shivani Arora Colleen Butts Lakshmi Gupta Spencer Jones."— Presentation transcript:

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

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

3 CURRENT SNAPSHOT The worlds seventh wealthiest economy Current President - Dilma Rousseff GDP = $2.1 trillion GDP per capita (PPP, 2010): US $11, 127 Literacy Rate, adult total - 90% Labor Participation Rate – 65% Unemployment = 4.7% Population: 190.7 million Inflation = 6.5%

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: Itaú Unibanco, Banco Bradesco, Bank of Brazil Telecommunications, Energy Commerce, Computing

9 1960s1970s1980s1990s1950s 2000s - Now 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 Stagnation & Industrialization Import substitution of consumer goods Rapid growth for manufacturing post 1964 GDPgrowth rate down to 4% Stagnation, Inflation and Crisis More oil-shocks Economic decline: IMF control: inflation at 5000% Termed “lost decade” Economic powerhouse End of inflation Rise of consumerism Growth of 7.5% in 2010 Lula Silva’s rise to power BRAZIL‘S ECONOMIC TIMELINE

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-speculation could 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/We aknesses 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/3255http://www.americasquarterly.org/node/3255) http://online.wsj.com/article/BT-CO-20120123-706648.htmlhttp://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.htmlhttp://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://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-accounthttp://www.tradingeconomics.com/brazil/current-account, http://www.france24.com/en/20110708-brazil-accuses-china-us-over-currency-policy 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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