- Key features of its recent development
Brazil, with a population of 208 million, is a large producer and a large buyer, making it one of the world’s largest and most important markets and emerging economies (FocusEconomics, n.p.). The rapid growth of the Brazilian economy earned it a place as a BRIC country of influence. Unfortunately, there have been challenges to this growth due to a great recession in 2014. In the table below some of the challenges can be seen as the low and negative growth of GDP over the past four years, along with decreases in domestic demand and consumption, investment, industrial production, retail sales, and balance of accounts. This was compounded by double digit inflation, high unemployment and rising public debt. The result was a downward spiral. Consumers did not have the spending power that they did before the recession both because of downward indicators of employment as well as the progressively compounding inflation at that same time. The lack of domestic demand had a dampening effect on domestic production, and this affected exports, which were falling even while Brazil needed increased exports in order to meet economic goals.
Table 1: Brazil Economic Indicator Data (Source: FocusEconomics, n.p.)
|GDP per capita (USD)||12,278||12,106||8,785||8,720||9,896|
|Economic Growth (GDP, annual variation in %)||3.0||0.5||-3.5||-3.5||1.0|
|Domestic Demand (annual variation in %)||3.7||0.3||-6.3||-5.1||0.9|
|Consumption (annual variation in %)||3.5||2.3||-3.2||-4.3||1.0|
|Investment (annual variation in %)||5.8||-4.2||-13.9||-10.3||-1.8|
|Industrial Production (annual variation in %)||2.1||-3.0||-8.3||-6.4||2.5|
|Retail Sales (annual variation in %)||4.3||2.2||-4.4||-6.3||2.1|
|Public Debt (% of GDP)||51.5||56.3||65.5||70.0||74.0|
- Key current national economic issues, problems and macroeconomic policy priorities
The key current national economic issues are the recovery from 2014 recession, keeping inflation and unemployment down and industrial production up, and uncertainty in relation to the policies of the newly elected president. Recovery issues are focused on government debt, trade balance, and inflation. This is of course a great challenge, because growing economies tend to result in inflation. Avoiding this is necessary because economic growth will not reach all Brazilians at once, and rapid growth in one sector could be devastating for households as a consequence.
The 2014 recession was one which created a great deal of difficulty for the Brazilian people and Brazilian business, but it is not currently clear what new macroeconomic approaches might be taken due to a recent change in government. President Jair Bolsonaro is generally considered to be interested in market friendliness and economic growth as well as fiscal debt reduction (FocusEconomics, n.p.). The approach to the fiscal deficit before the election had been providing slow progress, but the public debt has continued to rise (FocusEconomics, n.p.). It did not help that in the second quarter the transportation of goods was affected by a mass strike of truckers (FocusEconomics, n.p.). The trade balance is substantially worse, but the current account balance has improved (FocusEconomics, n.p.). Exports have nearly returned to pre-recession levels; however continued lack of consumer and industrial confidence can be seen with import indicators still lagging significantly behind. It can be assumed that improve the balance of trade, increasing production and increasing exports will be key components of any new economic policies or reforms.
Table 2: Brazil Macroeconomic Data (Source: FocusEconomics, n.p.)
|Current Account (% of GDP)||-3.0||-4.2||-3.3||-1.3||-0.5|
|Current Account Balance (USD bn)||-74.8||-104.2||-59.4||-23.5||-9.8|
|Trade Balance (USD billion)||2.3||-4.0||19.7||47.7||67.1|
|Exports (USD billion)||242||225||191||185||218|
|Imports (USD billion)||240||229||171||138||151|
- Focus Economics. “Brazil Economic Outlook”. (Nov 2018). Available from: https://www.focus-economics.com/countries/brazil