Brazil

Despite robust domestic demand, tax incentives and public investment programs, Brazil’s GDP growth significantly slowed down in 2011 as compared to the previous year. A moderate unemployment rate (at historic lows), easy access to credit (although only for “national champions†) and initiatives to reduce poverty, in iem:conjununction with programs for industrial development and competitiveness promotion were negatively reflected on the inflation rate. In September 2011, this indicator reached its highest level in six years. Consequently, the monetary policy, although slightly more relaxed, remained restrictive. Preparations for the Brazil FIFA World Cup (2014) and Olympic Games (2016), accompanied by massive investments in infrastructure were supposed to support economic growth in the medium term. Moreover, the government continued the implementation of a number of other programs, with beneficial effects on the economic growth, such as the second phase of the Acceleration of Growth Program (PAC2, Aceleração do Crescimento) and the plan to stimulate the country’s industrial development “Plano Brasil Maior 2011-2014†. Besides programs designed for the infrastructure development and innovation stimulus, the Government continued on all fronts fight against poverty. The paper concludes that although the Brazilian economy fundamentals are generally favorable nevertheless its economic development prospects depend on the world economy, to which Brazil is highly “connected†through trade and investment flows.