A Report on Brazil

Topics: Gross domestic product, Brazil, World Economic Forum Pages: 15 (4490 words) Published: November 14, 2012
1.Introduction and general country overview

Being the fifth largest country in the world by surface area and population, and recently emerging as one of the fastest growing global economies , Brazil can hardly be overlooked as a potential target of investment, especially in the light of the 2014 World Cup and the 2016 Olympics. Nevertheless, an immediate word of caution is at place here. Even though Brazil is 25% of the highly hyped BRIC-countries, the engine seems to show some hiccups, as it is revealed that due to high interest rates and an overly appreciated national currency, the Brazilian economy in 2011 had its second-worst performance since 2003 (2.7% growth versus 7.5% in 2010) . As a result, Brazil is losing international competitiveness and is being outperformed by its fellow BRIC-nations . This is also noted in a recent report from Nasdaq, in which it is claimed that a central bank survey showed forecasts of a growing inflation and declining economic growth . Notwithstanding these recent hiccups, the fact that Brazil is still in the investor spotlight is, however, not the result of a logical and benign transition. As did many Latin-American nations in the second half of the twentieth century, Brazil too found itself temporarily under the yoke of rightist regimes. In 1964, a successful coup d’etat aimed at the socialist rule of president Goulart hurled Brazil into 21 years of military dictatorship, culminating in the extreme rightist rule of president Medici in the early seventies. Economically, this led to a steep growth (based on large construction projects), but it only benefitted the rich percentiles of the oppressed population . The welcome change came in 1985, when Brazil set out an a course towards democracy; a goal finally attained during the presidency of Lula da Silva, and his successor Dilma Rousseff.

Brazil has the world sixth largest economy by nominal GDP. Its economy can be divided into three components: agriculture, industry sector and service industry. Brazil has a well diversified agriculture and is the largest producer of sugarcane, coffee, tropical fruits and frozen concentrated orange juice. This industry sector employs 10% of Brazil’s total labour force and contributes to 5.5% of its total GDP in 2011. Besides this, Brazil has the largest cattle herd in the world. The other side of the coin is that the increase in production of the country’s livestock and crops leads to a rise of deforestation and land cleaning in the country and makes Brazil one of the top world greenhouse gas emitters. The industry in Brazil is diversified, well developed and even one of the most advanced industries in Latin America. Main output of the industry is automobile and parts, machinery and equipment, textiles, cement, computers aircrafts, steel and petrochemicals and consumer durables. The industry benefits from Brazil’s extensive mineral resources. Raw materials for the industry and for export earnings are provided due to large iron and manganese reserves. Furthermore, deposits of gold, zinc, copper, uranium, chromite and other minerals are exploited. The industrial sector employs 19% of Brazil’s total labour force and contributes to 27.5% of its total GDP. Brazil’s services sector is sophisticated, well developed and includes telecommunication, banking, energy, commerce and the computing sector. The banking sector is stable and is responsible for the provision of local firms with a wide range of financial products, however interest rates remain among the highest in the world. The energy sector is embossed by hydroelectric power where Brazil is one of the world’s leading producers. Hydropower accounts for 90% of the nation’s electricity. Moreover, Brazil is the 9th largest oil producer in the world. The nation’s overall oil production is conducted by Petrobras, a semi-government owned oil company. The service industry employs 71% of Brazil’s total labour force and contributes to 67 % of its total GDP ....
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