Brazil Economic Growth Essay

Currently, Brazil’s economy can be said to be better than it was some 30 years ago. This is because of the sustained implementation of policies that aid the economy. However the growth rate has been slowing down since 1980. From that time, there have been vulnerabilities in their public sector balance sheet and the distortion of taxes. This has resulted from the monetary policy that has been implemented in the country (http://www.wilsocentre.org). The growth rate is at 2.7percent although they aim to increase it to around three or four percent. It is also affected by the high interest rates that are experienced in the country.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Up to 1999, the rates were constantly increasing. This was because of the exchange rate stabilization program that was introduces and after that they rose because of the destabilization policies. The policies were put in place to help curb high inflation rate. This worked because since 1993 the inflation has been decreasing. A lot has actually changed during the governance of President Lula. Since their form of government is federative republic they have the mandate to remove the president from power through voting. The people in power therefore have to ensure that they improve the economy and make good their promises so that they can be voted back. Brazil has been able to move up to number 10 in the world economy scale.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The gross public debt compared to the GDP rates is very high. In June 2007, it had reached and 182 billion. The previous year recorded a debt rate of 157 billion. This is the debt owed to the creditors who are abroad (http://brazileconomy.blogspot.co). The government’s foreign debt in the same time period rose from 64.8 billion to 71.2 billion. Although the ratio between GDP and the gross public debt is skewed towards debt the fiscal surplus has been increasing. It has reached a level of 4.25 percent of the GDP because of the high interest rates. It means that the GDP is also increasing.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Brazil concentrates on the production of iron and steel, chemicals, petroleum processing, automobile assembly and cement making (http://www.nationsencyclopedia.com). The motor vehicle assembly industry is the backbone of Brazilian economy. Through foreign investment and construction of other plants the industry is expanding rapidly. The export sector contributes greatly to the growth of the economy. The export intermediary goods contribute 13.5 percent of the economy while the manufactured goods contribute 55 percent of GDP. Most of the intermediary goods are from the steel and iron industry and also the cement making industries.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The Brazilian economy is controlled by both public and private sector but leans more on the private sector. It allows foreign investment in its industries. It has a lot of natural resources including crude oil, which it mines, and processes. Most of these industries are privately owned and the government benefits from the taxes paid. It works closely with the United States of America. It buys American treasures and as of June 2007 the share of Brazil of he America treasures had risen from 1.7 percent the previous year to 4.2 percent. The relationship between America and Brazil is therefore said to be positive because they buy from each other. America benefits from the Brazilian industries as consumers and also as investors and Brazil benefits in the same way. Reference: Brazil Economy Watch Tuesday September 18th 2007. Retrieved on September 20th 2007 from http://brazileconomy.blogspot.com/ BRAZIL INDUSTRY retrieved on September 20th 2007 from http://www.nationsencyclopedia.com/Americas/Brazil-INDUSTRY.html Economic Policy and Prospects for Reform: Lula’s Second Administration November 2006 retrieved on 20th September 2007 from http://www.wilsoncentre.org/topic/pubs/ThinkingBrazil.24.pdf.