Overview of the Brazilian Economy

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Brazil is an upper centre salary country located in South America with a populace of 195 million individuals The Net National Income (NNI) per capita in (2010) was $9,390 – this was well over the upper centre salary normal of $5,884 – can Brazil (one of the BRIC nations) get away from the centre pay trap? Brazil has perhaps the most astounding pace of urbanization on the planet with 87% of the all-out populace living in urban territories compared with a 57% normal for upper centre countries. This country has 91% of people literate and has the life expectancy of 73 years. Brazil’s primary exchanging accomplices are China (15%), the USA (10% of fares) and Argentina (9%). The Brazilian infrastructure was highly supported by the 2014 Soccer World Cup held in Brazil and 2016 Olympic game (Riley, 2019).

Brazil’s economic freedom value is 51.9 and the economy of Brazil is considered to eb the 150th freest in 2019 Index. Its general score has expanded by 0.5 point, with upgrades in labor opportunity and government spending outpacing decreases in legal adequacy and government respectability. Brazil is positioned 27th among 32 nations in the Americas district, and its general score is beneath the territorial and world averages (Anon., 2019).

As indicated by the World Economic Situation and Prospects 2019 report issue BU the UN, Brazil’s financial development could rise to 2.1% in 2019 and 2.5% in 2020. Contrasted with its 1.4% development in 2018, the prediction develops trust in Brazil’s initial financial recuperation. This is upheld by another monetary report issued by the OECD. It likewise extends development speeding up for Brazil’s economy during 2019 and 2020, while low expansion, moderate compensation development, and diminishing joblessness are required to reinforce private utilization and with that expanded remote ventures (Schneider, 2011).

Economic Problems Facing Modern Societies Today

Globalization has impacted this world massively in this 21st century. Many developing countries has been able to connect with developed countries and do the trade among each other. Economic globalization helps to generate more economy in the world. People will get chance to have higher standard of living. The research has found out that, the people of Japan and western countries consumes 32 times more resources than the consumers of developing nations. There are several problems that the current societies are facing these days which degrades the economy of the nation and world as well. The problems like Corruption, political instability, lack of proper infrastructure of development, lack and skilled labor and risk of not getting intellectual rights. These problems are usually faced by developing countries where there is a very weak system in place. In this modern society, some peoples are able to reap the rewards from this economic situation, but some peoples are left behind by not having the right access to the system and some even go through the worse. Usually in developing countries, the peoples who are in poverty line have the weak access to their intellectual rights and they are always in adversity. And also, the poor infrastructure also affects the society massively, especially in these developing countries, they have to rely upon developed nations for major tasks and they have to be totally dependent upon them. And also, the peoples are not equipped to deal with the economic situations. For example: the farmers find very difficult to survive in this economic focussed society. They find easy to work in factories doing the labor work because of lack of education and not having the proper skills and also lacking the mindset to learn new things.

The countries like Nepal, India, Brazil and many more developing countries are least developed countries in economies whereas the nations like United States of America, Australia, and many other developed countries have advanced economies. And the worst thing is the countries with advanced economies tries to dominate the economy of the world. Next is the foreign investor in the developing countries. The peoples love to invest where they can get the maximum outcome financially. Most of the foreign investors invest their capital in developing countries in the advancement of their infrastructure. The investors somehow help to improve the standards of the peoples by helping the countries to maintain the stability economically and politically. A report has shown that, more than $422 billion was invested in developing countries between 1988 and 1995. And the interesting part is much of the money was invested in Asian market. Obviously, it helps these countries in the economic development but some of the countries were left behind in the large part of Africa. Although the poverty line is decreasing day by day but in the countries like Caribbean and Latin America, it’s been increasing slightly (Anon., 2012).

Microeconomics Principles with Its Effects

Microeconomies is the branch of economies theta helps to study the economic behavior of individual economic units such as households, small firms, consumers and producers. Demonstrate understanding of elementary economic theories and their application to economic problems. This principle observes the behaviors of independent companies and households that how they make decisions in given short supply of resources. The other goal in microeconomics is to observe the behavior to predict the success. Microeconomics principle of economics describes how the individuals make decisions to upgrade their utility. The various companies use microeconomics to make decisions regarding following factors.

Economic Utility

This refers to the individuals getting the satisfaction by consuming the goods and services. When the price of certain product decreases, the peoples buy more products and likely to have more utility from them. But when the price of the product increases, the peoples are likely to have the less utility from that product and consume very few and try to with the cheaper alternatives.

Microeconomics principle tells us that the marginal utility of a products declines as per the increment in the available supply. If the peoples are likely to use the goods and services in large quantity, they begin to get less utility from it and are like to switch to alternatives where they can get more satisfaction. The consumers are prepared to pay less to the goods and services from which they get less utility.

Supply and Demand Decisions

As we all know that the supply is controlled by the companies. But, if the consumers started to pay more to the goods and services, the industry will focus more on the production and hence the supply also increases. Microeconomic principle says that, if all the things being constant, if the price of the goods and services increase, the supply of the goods and services also increases. For example: if a laptop cost $100 and if the consumers started to pay $150, the business will increase the number of productions. Hence, if all the factors remain same and constant, if the price of goods and services increases, the supply also increases.

Labor Decisions

Every business needs labor to perform several tasks. And the labor is heavily impacted by the wages. Wages are something that the company pays to its workers for their work. This has various benefit to the workers, like they van experience vacation hours, insurance and professional development. Microeconomic principle says that, if all the factors remain constant, if the wage of the worker increases, the business demand less labor (Loy, 2019).

Macroeconomics Principles with Its Effects

Macroeconomics is the branch of economics which deals with the whole economy including employment, inflation, economic growth, price levels and correlation among all these. While the Microeconomics deals with the small area of economics such as household and how businesses make decisions, macroeconomics deals with the bigger picture-whole nation’s economy (Anon., 2019). These are basic summary of key principles of macroeconomics with their effects.

National Income

The Macroeconomics is responsible to deal with the economy of a country. This includes Gross National Product (GNP), Gross Domestic Product (GDP) and Net National Income (NNI). The only purpose is to draw the picture of country’s economy situation. This helps the country to figure out the goods and services produced by the nation over a period of year.

Inflation

Inflation is the investigation of how the expense of merchandise and enterprises ascends over the long period. For instance, if a vehicle cost $1000 more in a given year than it completed ten years already, that would be an instance of inflation. Inflation is a vast region of financial aspects however the accord among driving present day market analysts is that it’s attractive for swelling to be kept at a low or enduring rate as close to zero as would be prudent. These discredits the negative outcomes of financial subsidence.

Financial Output

This is the investigation of the products and enterprises which a national economy produces. A high yield is alluring as the more cash that is spent on a country’s products and enterprises, the more advantage this holds for a nation because of the way that more individuals will be in business and more noteworthy expense income will be raised (Anon., 2019).

Economic Problems Faced by Brazil

Brazil’s economy is full of trouble and it is not been favorable for last couple of years. The country’s economy is massively dependent to its export-driven trade and the worst thing is China has been slowing down the demand of products. Talking about the stock market of Brazil, it has been few years, the market has been the disaster. Many investors have given up and stopped investing in the Brazil and the country is facing a lot of problems. The main problem is the government itself. The government itself has been charged various corruption charges and the country is going through the political instability. Here are few of the problem the country is facing.

Recession

China used to be the biggest market for Brazil where the trade happens massively. The China used to demand for various materials from copper and iron ore to fertilizer. As per the report of 2009, the demand from China has been decreasing which is impacting the economy of Brazil massively and hasn’t been better yet. The country is in recession at the moment and the budget deficit is crossing 9% of GDP. In the meantime, the expense of servicing Brazil’s liability is running about 20% every year. Liability instalments devour 8% of complete yield, and gross liability is about 70% of GDP (Vita, 2019).

Stagnation of Economy

The fundamental issue of the nation today is the stagnation of the economy with its results identified with the conclusion of enterprises and business and administrations exercises and, most importantly, the mass joblessness of 13 million laborers and the underutilization of 28 million specialists. Bolsonaro and his pastors show that they are not powerful supervisors since they don’t invest their energy taking a shot at the main thing to Brazil right now which is the reactivation of the economy and the battle against joblessness, they don’t drive their endeavors to the ideal outcomes by the Brazilian individuals which is the resumption of national advancement, don’t begin with what should be done (reactivating the economy and battling joblessness) and don’t concentrate on the couple of enormous zones where predominant execution will create great outcomes for the nation (Alcoforado, 2019).

Recommendations

The Bolsonaro government should relinquish the neoliberal financial model executed in 1990 from which the government renounced national monetary arranging. The neoliberal model, in charge of Brazil’s monetary fiasco, ought to be quickly changed by the national developmentalist model with dynamic state investment in financial arranging, as happened in the 1930-1980 period when Brazil arrived at its most prominent financial and social improvement. The Bolsonaro government should also more focus on decreasing the government bills and expenses and merely focus on the infrastructure development. In order to get the benefit economically in long term, the government can also reduce the interest rate which has been the burden for the entrepreneurs who wants to develop and expand their business in that country (Raj, 2008).

Ways to Improve the Country’s Economic Growth

The political conditions in Brazil, the biggest Latin American nation with a populace of 208 million and $ 1.8 trillion GDP, appears to be bound to stay flimsy for quite a while, at any rate till another President takes over one year from now. Starting at now, previous President Luiz Inacio Lula da Silva is the most prevalent political pioneer from the Left-wing Workers’ Party, in conflict for the post. Be that as it may, the disputable issue is whether Lula, a previous two-term prominent President who directed the longest time of Brazil’s financial development in late history, expanded the lowest pay permitted by law to well over the pace of expansion and widened state help to the most ruined, will be in a situation to crusade for the post and accomplish the administration in October 2018 when the following presidential race is expected (Sen, 2017).

Following are the recommendations from my side to the Brazil for economic growth can meet the expectation and increasing demands of the consumers and industries.

Tax Cuts and Tax Rebates

Tax reductions and assessment discounts are intended to return more cash to the pockets of customers. In a perfect world, these purchasers spend a bit of that cash at different organizations, which expands the organizations’ incomes, money streams, and benefits. Having more money means organizations have the assets to acquire capital, improve innovation, develop, and grow. These activities increment profitability, which develops the economy. Tax breaks and discounts, advocates contend, enable buyers to invigorate the economy themselves by instilling it with more cash.

Using Infrastructure to Encourage Economic Growth

infrastructure spending occurs when a local, state, or federal government spends money to build or repair the physical structures and facilities needed for commerce and society as a whole to thrive. Infrastructure includes roads, bridges, ports, and sewer systems. Economists who favor infrastructure spending as an economic catalyst argue that having top-notch infrastructure increases productivity by enabling businesses to operate as efficiently as possible. For example, when roads and bridges are abundant and in working order, trucks spend less time sitting in traffic, and they don’t have to take circuitous routes to traverse waterways (DEPERSIO, 2019).

Bibliography

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Anon., 2012. Facts and Details. [Online] Available at: http://factsanddetails.com/world/cat57/sub383/item2135.html [Accessed 28 08 2019].
Anon., 2019. 2019 Index of Economic Freedom. [Online] Available at: https://www.heritage.org/index/country/brazil [Accessed 26 08 2019].
Anon., 2019. An Introduction to the Principles of Macroeconomics. [Online] Available at: https://education.stateuniversity.com/pages/cw1d9yd1dj/An-Introduction-to-the-Principles-of-Macroeconomics.html [Accessed 27 08 2019].
Anon., 2019. What is Macroeconomics? – Definition & Principles. [Online] Available at: https://study.com/academy/lesson/what-is-macroeconomics-definition-principles-quiz.html [Accessed 27 08 2019].
DEPERSIO, G., 2019. What Are Ways Economic Growth Can Be Achieved?. [Online] Available at: https://www.investopedia.com/ask/answers/032415/what-are-some-ways-economic-growth-can-be-achieved.asp [Accessed 27 08 2019].
Loy, B., 2019. How Microeconomic Principles Affect Business Decisions. [Online] Available at: https://study.com/academy/lesson/how-microeconomic-principles-affect-business-decisions.html [Accessed 27 08 2019].
Raj, 2008. Steps to Stop Recession for Governments, Companies & Individuals. [Online] Available at: https://rajn.co/steps-to-stop-recession-for-governments-companies-individuals/ [Accessed 27 08 2019].
Riley, G., 2019. Brazil – Economic Growth and Development. [Online] Available at: https://www.tutor2u.net/economics/reference/brazil-economic-growth-and-development [Accessed 26 08 2019].
Schneider, D., 2011. Brazil Economy Outlook 2019. [Online] Available at: https://www.8020investors.com/emerging-markets/brazil-economic-outlook/ [Accessed 26 08 2019].
Sen, G., 2017. Political Instability in Brazil: Causes and Likely Future Scenario. [Online] Available at: http://www.brazilmonitor.com/index.php/2017/10/12/political-instability-in-brazil-causes-and-likely-future-scenario/ [Accessed 27 08 2019].
Vita, S., 2019. 3 Economic Challenges Brazil Faces in 2016. [Online] Available at: https://www.investopedia.com/articles/investing/123015/3-economic-challenges-brazil-faces-2016.asp [Accessed 27 08 2019].

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