Overview on Economy of Brazil

Topics: Central bank, Foreign exchange market, Inflation Pages: 12 (3879 words) Published: April 28, 2013

Brazil is the largest national economy in Latin America, the world's sixth largest economy at market exchange rates and the seventh largest inpurchasing power parity (PPP), according to the International Monetary Fund and the World Bank. Brazil has a mixed economy with abundant natural resources. The Brazilian economy has been predicted to become one of the 5th largest in the world in the decades to come, along with GDP per capita following and growing. Its current GDP (PPP) per capita is $10,200, putting Brazil in the 64th position according to the World Bank data.

Brazil has large developed agricultural, mining, manufacturing and service sectors, as well as a large labor pool.Brazilian exports are booming, creating a new generation of tycoons. Major export products include aircraft, electrical equipment,automobiles,ethanol ,textiles , footwear, iron ore, steel , coffee, orange juice, soybeans & corned beefs. The country has been expanding its presence in international financial and commodities market and is one of the groupmember of emerging economies of BRIC.

Brazil pegged its currency, the real, to the U.S. dollar in 1994. However, after the East Asian financial crisis, the Russian default in 1998and the series of adverse financial events that followed it, the Central Bank of Brazil temporarily changed its monetary policy to a managed-float scheme while undergoing a currency crisis, until definitively changing the exchange regime to free-float in January 1999.


Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries, and Brazil is expanding its presence in world markets. Since 2003, Brazil has steadily improved its macroeconomic stability, building up foreign reserves, and reducing its debt profile by shifting its debt burden toward real denominated and domestically held instruments. In 2008, Brazil became a net external creditor and two ratings agencies awarded investment grade status to its debt. After strong growth in 2007 and 2008, the onset of the global financial crisis hit Brazil in 2008. Brazil experienced two quarters of recession, as global demand for Brazil's commodity-based exports dwindled and external credit dried up. However, Brazil was one of the first emerging markets to begin a recovery. In 2010, consumer and investor confidence revived and GDP growth reached 7.5%, the highest growth rate in the past 25 years. Rising inflation led the authorities to take measures to cool the economy; these actions and the deteriorating international economic situation slowed growth to 2.7% for 2011 as a whole, though forecasts for 2012 growth are somewhat higher. Despite slower growth in 2011, Brazil overtook the United Kingdom as the world's seventh largest economy in terms of GDP. Urban unemployment is at the historic low of 4.7% (December 2011), and Brazil's traditionally high level of income equality has declined for each of the last 12 years. Brazil's high interest rates make it an attractive destination for foreign investors. Large capital inflows over the past several years have contributed to the appreciation of the currency, hurting the competitiveness of Brazilian manufacturing and leading the government to intervene in foreign exchanges markets and raise taxes on some foreign capital inflows. President Dilma ROUSSEFF has retained the previous administration's commitment to inflation targeting by the central bank, a floating exchange rate, and fiscal restraint.

Brazil GDP
The Gross Domestic Product (GDP) in Brazil was worth 2476.65 billion US dollars in 2011, according to a report published by the World Bank. The GDP value of Brazil is roughly equivalent to 3.99 percent of the world economy. Historically, from 1960 until 2011, Brazil GDP averaged 469.51 Billion USD reaching an all time high of 2476.65 Billion USD in December of 2011 and a...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Brazil Economy Essay
  • Brazil economy Essay
  • The Economy of Brazil Essay
  • Brazil Economy Essay
  • Economy Overview Essay
  • Brazil Research Paper
  • Brazil Essay
  • An Overview of Brazil Essay

Become a StudyMode Member

Sign Up - It's Free