SUMIT

KHUSHBOO
ASHIK
VARUN
MEENAL
HARSHAL
HARSHITA
VIBHOR
MADHURI
PRERNA
SHUBHANKAR

ECONOMY OF BRAZIL
 INDEX
• GDP
• MONETARY
POLICY
• FISCAL
POLICY
• INFLATION
• PER
CAPITA
INCOME
 OVERVIEW
• Brazil was the leading world producer of many
agricultural goods.
•
• The country's growing prosperity was offset by
the inflation  .
•
• Government external debt more than doubled
during the 1980s and 1990s.
•
•
•
• The increase in government debt was due mainly
to increased interest paid to its lenders and the
borrowing of new money to implement
economic and social plans in the country.
•
• Because the new loans were used ineffectively,
the debt service increased significantly.
• By making bigger payments to offset the debt,
the government was left with few resources to
carry on its own economic and social
development plans.
•
• From 2003 to 2007, Brazil ran record trade
surpluses and recorded its first current account
surpluses since 1992.
• Brazil incurred another current account deficit in
2008, as world demand and prices for
commodities dropped in the second-half of the
year.
 GDP
• The gross domestic product
(GDP) or gross domestic income
(GDI) is a basic measure of a
country's overall economic
performance. It is the market value
of all final goods and services made
within the borders of a country in a
year.
•

• GDP = private consumption +

gross investment +
 GDP
9.0 3.0

8.0
2.0

7.0
1.0
6.0

5.0 0.0

4.0 -1.0

3.0
-2.0
2.0

-3.0
1.0

0.0 -4.0
mar/03

mar/04

mar/06
mar/05

mar/07

mar/08
GDP Growth (YoY -LHS) GDP Growth (QoQSA - RHS)
OFFICIAL GDP FORECAST
7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0

-1.0

-2.0

2009 F

2010 F
2002

2003

2008
2000

2001

2004

2005

2006

2007
Composition of GDP
 INFLATION
• inflation is a rise in the general
level of prices of goods and
services in an economy over a
period of time. When the price level
rises, each unit of currency buys
fewer goods and services;
consequently, inflation is also an
erosion in the purchasing power of
money
 INFLATION
10.0

9.5 15.0
9.0
13.0
8.5

8.0
11.0
7.5
9.0
7.0

6.5
7.0
6.0

5.5 5.0

5.0
3.0
4.5

4.0 1.0

3.5
-1.0
3.0

2.5 -3.0
May-04

May-05

May-06

May-07

May-08
Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09
Sep-05

Sep-06

Sep-07

Sep-08
Sep-04

Avg. Core Headline CPI Food (right scale)

12.0
11.1

10.0

8.0

6.4
5.9
6.0 5
.7
5
.5

5
.0

4.0 4.2 4.1

4.0 3.8

3.3 3.4
3.1 3.1

2.5

2.0

0.0
Headline Monitored Tradeable FoodPrices Services
Prices (ex-food)
2007 2008 2009F 2010F
 MONETARY POLICY
• Monetary policy is the process by
which the government,
central bank, or monetary authority
of a country controls (i) the
supply of money, (ii) availability of
money, and (iii) cost of money or
rate of interest
 MONETARY POLICY
14.0
SELIC RATE
13.5

13.0

12.5

12.0

11.5

11.0

10.5

10.0

9.5

9.0

8.5

8.0
Nov-08

Nov-09
May-08

May-09
Jan-08

Jan-09
Jul-08

Jul-09
Sep-08

Sep-09
Mar-09
Mar-08
 10
12
14
16
18
20
22

0
2
4
6
8
Dec-01

May-

Oct-02

Mar-03

Aug-03

Jan-04

Jun-04

Nov-04

Apr-05

Sep-05

Ex-ante real interest rate

Feb-06

Jul-06

Dec-06

May-

Oct-07

Mar-08

Aug-08

Jan-09
INTEREST RATES
 FISCAL POLICY
• fiscal policy is the use of
government spending and revenue
collection to influence the economy
 FISCAL POLICY
6.0

• TOTAL EXPENDITURE-
4.0

2.0

0.0

-2.0

-4.0

-6.0
Dec-00

Dec-01

Dec-02

Dec-03

Dec-04
Dec-98

Dec-99

Dec-05

Dec-06

Dec-07

Dec-08
-8.0

Primaryresult Nominal result

FISCAL POLICY

Selec
 34
38
42
46
50
54
58

Apr-01

Sep-01

Feb-02

Jul-02

Dec-02

May-03

Oct-03

Mar-04

Aug-04

Jan-05

Jun-05

Nov-05

Apr-06

Sep-06

Feb-07

Jul-07
% OF GDP

Dec-07

May-08

Oct-08
PUBLIC-SECTOR DEBT
 PER CAPITA INCOME
• PER CAPITA INCOME…….
• 2004-
• 2005-
• 2006- 9400$
• 2007- 9800$
• 2008- 10,100$
 GDP-growth rate
• 2004-
• 2005-
• 2006- 4%
• 2007- 5.4%
• 2008- 5.2%
 VARIOUS RESOURCES
• STOCK OF MONEY
•131.1 $ BILLION

• MARKET VALUE OF PUBLICLY TRADED

SHARES
• -1.37 TRILLION $
•
 SOME FACTS
• Currency unit – Brazilian Real
(US$ 1=BRL 2.331)
• SDR exchange rate for Brazilian
Real (16 Jan, 2006 ):
• SDR/Unit = 0.30 Unit/SDR =
3.296230
• Major Trading Partners:
• Imports: US 18.3%, Argentina
8.9%, Germany 8.1%, China
5.9%,
 Cont…
• Nigeria 5.6%, Japan 4.6%
• Exports: US 20.8%, Argentina
7.5%, Netherlands 6.1%, China
5.6%,
• Germany 4.1%, Mexico 4%
•