BRAZILMacroeconomics

ECON224-1104B-22

Prof. Hector Morales

Victoria Rock

December 4, 2011

INTRODUCTION

As an employee of the World Bank, I have been asked to research an economic concern in a South American Country. I have chosen Brazil for this research and will discuss the Gross Domestic Product (GDP) and their situation.

BRAZIL

Brazil, located along the Atlantic Ocean in South America, is the fifth largest country in the world and the seventh largest economy at market exchange rates as well as the eighth largest in purchasing power. In 2007 they launched a four-year plan to spend $300 billion in order to modernize its roads, power plants, and ports. (Brazil, 2011) Unlike most countries, Brazilians need to know who they are doing business with before they can work effectively. They prefer face-to-face meeting instead of written communication because it allows them the chance to know the person they are doing business with. However Brazilians insist on drawing up detailed legal contracts. To a Brazilian, the individual they deal with is more important than the country. Since this is a group culture, it is important that you do not do anything to embarrass a Brazilian. (Brazil - Language, Culture, Customs and Etiquette, 2011)

GROSS DOMESTIC PRODUCT (GDP)

The Gross Domestic Product, (GDP), is one of the measures of national income and input for a given country’s economy. GDP is sometimes regarded as the sum of profits added at every level of production, the intermediate stage, of all final goods and services produced within a country at a stipulated time frame and it is rarely given monetary value. (Gross domestic product, 2011) The basic formula for calculating the GDP is;

Y=C+I+E+G

Y= GDP

C= Consumer Spending

I= Investment made by industry

E= Excess of Exports over Imports

G= Government Spending (Calculating GDP, 2011)

BRAZILS SITUATION

According to the World Fact book put out by the CIA, “Since 2003, Brazil has steadily improved macroeconomics stability, building up foreign reserves, reducing its debt profile by shifting its debt burden toward real denominated and domestically held instruments, adhering to an inflation target, and committing to fiscal responsibility. In 2008, Brazil became a net external creditor and two ratings agencies awarded investment grade states to its debt.” When the onset of the global financial crisis in September of 2008, Brazil’s currency and stock market saw large swings as foreign investors pulled their resources out of Brazil. Although they experienced two quarters of recession, they were one of the first markets to begin a recovery. With consumer and investor confidence revived and GDP growth returned to positive, the Central Bank expects growth to continue. (The World Factbook, 2011)

BRAZIL’S GDP

(In US Dollars, 2010)

GDP 2010 2009 2008 COUNTRY COMPARISON TO THE WORLD

PURCHASING POWER PARITY

$2,172 TRILLION $2,021 TRILLION $2,034 TRILLION 9 (2010)

REAL GROWTH RATE

7.5% -0.6% 5.2% 30 (2010)

PER CAPITA (PPP) $10,800 $10,200 $10,400 102 (2010)

COMPOSITION BY SECTOR

AGRICULTURE: 5.8% (2010)

INDUSTRY: 28.8% (2010)

SERVICES: 67.4% (2010)

BRAZIL’S GDP IN COMPARISON TO OTHER SOUTH AMERICAN COUNTRIES

SOUTH AMERICAN MARKETS AS PER GDP (2011)

Country GDP

8 $2,102,018 million

22 $694,690 million

26 $484,960 million

34 $369,324 million

41 $300,114 million

44 $281,368 million

62 $125,066 million

88 $52,111 million

89 $51,478 million

100 $36,235 million

152 $5,842 million

154 $5,069 million

Rank in world

Brazil Argentina Colombia Venezuela

Peru Chile

Ecuador Uruguay Bolivia

Paraguay Guyana

Suriname

SOUTH AMERICA MARKETS GDP PER CAPITA (2011)

CountryGDP

per capita

52 $17,376

57 $16,171

61 $15,469

71 $12,407

76 $11,845

85 $10,001

86 $9,992

87 $9,492

92 $8,335

98 $7,541

110 $5,548

Rank in world

Argentina Chile

Uruguay Venezuela

Brazil Peru

Colombia Suriname Ecuador Guyana

Paraguay

CONCLUSION

Brazil forms a major part of South American markets and is the largest economy on the basis of absolute GDP. The Brazilian economy’s solid performance during the financial crisis and its strong and early recovery has contributed to the country’s transition from a regional to a global power.

REFERENCE

Brazil - Language, Culture, Customs and Etiquette. (2011, December 2). Retrieved from Kwintessential: http://www.kwintessential.co.uk/resources/global-etiquette/brazil-country-profile.html

Brazil. (2011, December 2). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Brazil

Calculating GDP. (2011, December 3). Retrieved from MindTool: http://mindtools.net/GlobCourse/formula.shtml

Economy of South America. (2011, December 3). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Economy_of_South_America#Annual_economic_growth

Gross domestic product. (2011, December 3). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Gross_domestic_product

The World Factbook. (2011, November 15). Retrieved from Central Intelligency Agency: https://www.cia.gov/library/publications/the-world-factbook/geos/br.html