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Brazil

Author

Listed:
  • Iulia Monica Oehler-Sincai

Abstract

Despite the incentives related to monetary and fiscal policies, the Brazilian GDP registered in 2012 its lowest growth rate after 2009 due to supply side constraints (including here poor harvests). At the same time, the second largest emerging economy worldwide is strongly affected by the unfavorable economic situation of its main trading partners: the EU (mainly due to the sovereign debt crisis in the Euro zone), the US and China, which face an economic slowdown. Moderate levels of public debt and budget deficit as a share of GDP still offer the Brazilian authorities sufficient room of maneuver for fiscal policy, in order to offset the slowing growth in other regions of the globe. The unemployment rate remains at low levels. Instead, the inflation rate, although still in the band targeted by the government (4.5% ± 2 percentage points), is in the upper half of this interval. Successive raise of the key interest rates in April and May 2013 suggests that the inflation rate is too high, affecting investment and consumption. Given the fact that Brazil hosts the 2014 FIFA World Cup and the 2016 Olympic Games, involving massive investment in infrastructure and also the current programs to stimulate economic growth and competitiveness, we conclude that the prospects for the Brazilian economy are favorable in the absence of new risk factors.

Suggested Citation

  • Iulia Monica Oehler-Sincai, 2013. "Brazil," Conjunctura economiei mondiale / World Economic Studies, Institute for World Economy, Romanian Academy.
    • Handle: RePEc:iem:conjun:y:2013:id:2822000009562151
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    More about this item

    Keywords

    Brazil; macroeconomic indicators; GDP; inflation; unemployment; general government net lending/borrowing; gross debt; structural weaknesses;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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