brazil wto - copy

8/3/2019 Brazil Wto - Copy

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BRAZIL

Submitted by:Surbhi Thakur A1802010119

Deepali Chaudhary A1802010Prateek Batra A1802010

Mayank Chawla A1802010Aakriti Kalra A1802010Sanchita Puri A1802010


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BRAZIL

Brazil deciphers a classic example ofproblems associated with evaluation ofdevelopment progress.

Occupies nearly half the total area ofSouth America

Largest country in Latin America

5th largest in the world.


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Most populated country

in the Latin Americawith population growthrate of 1.4%.

It is fifth most populated

country in the world. Though more than 75%

population lives inurban areas, the rapid

urbanization aidedeconomic developmentyet it led to growth inhuge slums.


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About Industries

BrazilNICs (Newly IndustrializingCountries)

More industrial development is in states such

as:

Rio de Janeiro

Sao Paulo

Parana

Rio Grande do Sul.

Large and sophisticated Industrial base

Largest producer of hydroelectric power


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Agriculture and Natural

Resources

Worlds largest exporter of coffee

Second largest exporter of soyabeansand cocoa

Brazil is well endowed with mineralresources such as Iron Ore, Mn, Bauxite,Tin, Nickel, Cu, Zn, Au (gold), Pb


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Even though brazil isendowed with

abundant natural

resources, a hugeterritory, and

sophisticated industrialbase, perhaps it is well

known for challenges itfaces/faced.


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Major Economic Problems

Poverty

Inflation

Declining Real Incomes

Foreign Debts

Trade Imbalance

A large state-owned sector

Import Barrier

Environmental Damage


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Real Plan

The Plano Real (Real Plan) was a set of measures taken tostabilize the Brazilian economy in early 1994

The Plano Real Introduced a new currency called the real (plural reais) on 1

July 1994, as part of a broader plan to stabilize the Brazilianeconomy,

enacted a series of contractionary fiscal and monetarypolicies, restricting its expenses and raising interest rates. Bydoing so, the country was able to keep inflation under control

for several years. In addition, the high interest rates attractedenough foreign capital to finance the current account deficitand increased the countrys international reserves.

put a strong focus on the management of the balance ofpayments, by setting the real at a very high value relative tothe U.S. dollar


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The new currency, stabilized inflation for

the first time in decades. High interestrates lowered inflationary pressures, byreducing the incentive to hold currency.

Investors, attracted by high interest rates,poured money into the Brazilian economyat unprecedented rates.

The real plan was successful in reducinginflation from 600% to 10% between 1994-1997 i.e the lowest inflation rate since1950s.


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CRISIS

The effects of the Asian crisis began to be feltin Latin America in October 1997, whenAsia's currency devaluations began

pressuring other markets, threatening totransform the regional crisis into a broadercrisis of emerging economies. Developmentsin Asia have affected Latin America through

two main channels of contagion: finance andtrade.

Russias 1998 default on its debt sentinternational investors into a panic.


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REAL Plan Crisis

Investors that previously displayed confidence inBrazils economy suddenly lost faith in thegovernments ability to maintain the reals crawlingpeg.

In 1998 investors expected Brazils central bank toeventually devalue the real. Between 1996 and 1998, Brazils reserves dropped by

$24 billion or 40 IMF provided a $41.5 billion loan in 1998 to help Brazil

defend its currency, in return the govt. was required totighten its fiscal belt even further. Trouble with IMF package when Real lost 30% of the

value. The governor of the central bank resigned.


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Effect of Devaluation (1996-2001)

1996 1997 1998 1999 2000 2001 2002

RealGDP

664 687 686 692 722 731 745

% change 2.7% 3.3% 0.1% 0.8% 4.3% 1.3% 1.9%

Unemployment

10.6 14.2 14.1 13.3 11.3 11.7 12.3


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Implications

Capital Flight

The stock market took nosedive

High Unemployment Rate

Widespread fear of Inflation


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After Crisis


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Inflation


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Current: Inflation is cooling off as energyprices have declined and the globalrecession has affected the countrys

economic growthRecent trend: Inflation has been steadilydeclining over the past several years due

to the success of The Real Plan


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GDP


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Current: GDP is expected to slide slightly

for 2009 due to the global crisis, however,the solid financial position of thegovernment and state banks will mitigate

the impact of the recession Recent trend: GDP has grown rapidly for

the last several years with the Brazilian

economy seen as a market for high growth


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Population


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Unemployment rate


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Interest Rate


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Future Trend

Brazils growth may take a couple of years toreach the levels attained prior to the globalcrisis

Population growth trends and forecast: Brazil ispredicted to have an expanding workingpopulation which will grow from 125M in 2006 to147.8M by 2020 and somewhat around 199M in2015

The Average Inflation in Brazil was reported at4.90 percent change in 2009, according to theInternational Monetary Fund (IMF). In 2015,Brazil's Average Inflation is expected to be 4.53

percent change.


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THANK YOU

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