Transcript An Overview of Brazil`s Economy

An Overview of Brazil’s Economy
February 1st, 2012
Team Itaú:
Shivani Arora
Colleen Butts
Lakshmi Gupta
Spencer Jones
AGENDA
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Overview
Major Economic Sectors
Economic History
Strengths and Weaknesses
Political Influences
Outlook
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%
PRIMARY EXPORTS
Value = $199.7 billion
• Transport Equipment
• Iron Ore
• Soybeans
• Coffee
• Footwear
Major Export Partners
Germany,
4.05%
Netherlands,
5.39%
China, 12.49%
Argentina,
8.40%
US, 10.50%
*Based on 2010
PRIMARY IMPORTS
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Value = $187.7 billion Major Import Partners
Machinery
Japan,
4.30%
Electrical and Transport
Germany,
US, 16.12%
Equipment
7.65%
Chemical Products
Argentina,
8.77%
Oil
China,
12.61%
*Based on 2010
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
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
SERVICE INDUSTRY
• GDP: 67.5%, Labor Force: 66%
• Banking: Itaú Unibanco, Banco
Bradesco, Bank of Brazil
• Telecommunications, Energy
Commerce, Computing
BRAZIL‘S ECONOMIC
TIMELINE
Sweeping changes
Spectacular Growth
Hyperinflation to Stabilization
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Political & Economic
1930 revolution: Old
Republic abolished
New State dictatorship
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1950s
GDP growth rate jumped
to 11%
External trade
expansion
1973 Oil shock
1960s
1970s
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1980s
Stagnation &
Industrialization
Stagnation, Inflation
and Crisis
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Import substitution of
consumer goods
Rapid growth for
manufacturing post 1964
GDPgrowth rate down to
4%
Bankruptcy leading to a
stabilization plan
Political instability
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More oil-shocks
Economic decline: IMF
control: inflation at
5000%
Termed “lost decade”
1990s
2000s - Now
Economic powerhouse
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End of inflation
Rise of consumerism
Growth of 7.5% in 2010
Lula Silva’s rise to
power
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
STRENGTHS
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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
WEAKNESSES
• Poverty
• Domestic Debt
• Inequality
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
SECTOR-SPECIFIC ECONOMICSs
• Industry vs. Emissions
• Agriculture and Energy vs. Deforestation
• Meeting Brazil’s energy demands
OUTLOOK
• Tighter monetary and fiscal policy
• Inflation continues to be an issue
• Strong economic recovery following global recession
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-onloans-as-yields-soar-for-small-rivals.html
http://www.gfmag.com/gdp-data-country-reports/311-brazil-gdp-countryreport.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-savedbrazil
http://internationalbusiness.wikia.com/wiki/Brazilian_Economic_Systems_Strengths/We
aknesses
https://mninews.deutsche-boerse.com/index.php/sp-brazil-well-prepared-smooth-outexternal-shocks?q=content/sp-brazil-well-prepared-smooth-out-external-shocks
RESOURCES
http://www.americasquarterly.org/node/3255)
http://online.wsj.com/article/BT-CO-20120123-706648.html)
http://www.bloomberg.com/news/2011-09-12/brazil-economists-see-faster-inflationslower-growth-after-rate-reduction.html,
http://mrzine.monthlyreview.org/2011/bp311211.html
http://www.washingtonpost.com/business/brazilian-tourists-spend-a-record-amount-ofdollars-abroad/2012/01/24/gIQAqWRXNQ_story.html
http://www.tradingeconomics.com/brazil/current-account,
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-centralbank-signals-more-cuts.htmlP
http://en.mercopress.com/2011/09/20/brazil-sponsors-forex-anti-dumping-importbarriers-to-compensate-us-dollar-devaluation
http://www.econ.puc-rio.br/gfranco/How%20Brazil%20Beat%20Hyperinflation.htm