Brazil’s Enigma
Sustaining Long Term Growth
Brazil:
Independence August 29, 1825
Government Democracy
Area 8,515,767 km^2
Population 201,032,714
GDP $2.523 Million
$12,528 Per Capita
Currency The Real
Introduction:
Brail is the largest country in both South America and the Latin American region. It ranks
fifth in the world in regards of both geography and population. In the past decade, Brazil
has been on the path to becoming one of the leading emerging markets; competing with
both China and India. Under President Luiz Inacio “lula” de silva’s presidency, the country
was well on it’s way to becoming a leading world economic power. Under Lula’s
presidency, the country was flourishing: poverty rate had dropped from 21% to 11%;
almost 32 million Brazilians rose to the middle class; unemployment dropped
substantially, and GDP had hit 7.5%. Though, regardless of all the positive impacts in
Lula’s presidency, there were certain aspects of the country that hindered its progress. For
instance:
· The Real’s appreciation
Lack of quality education
· “Custo Brazil”- High cost of conducting business in Brazil
Income Inequality
Poor infrastructure
Tax burden
Interest Rates
All of the above listed problems— along with others—have played a grave role in
hindering Brazil’s progress towards becoming one of the leading nations. “Custo Brazil”
was hurting domestic manufacturing, while foreign investments were overwhelming the
Brazilian markets which led to currency appreciation and inflation. Under Rousseff’s
presidency, the growth had stalled, and the administration was struggling with finding
balance between reducing inflation, maintaining a flexible exchange rate, and improving
the competitiveness of the Brazilian exports.
In this report, I will do a SWOT analysis to address Brazils strengths, weaknesses,
opportunities, and threats. I will address the problems at hand and the steps that the
government took to deal with the issues. Finally, I will end the report with my
recommendations on how the government should proceed.
SWOT Analysis:
Strengths:
One of the leading developing nations
o Reduction in poverty
o Reduction in unemployment
o Reduction in poverty rate
o Boom in commodity
o Great foreign investment
o Biggest exporter of iron ore and soybeans
Weaknesses:
o Custo Brasil
o Currency appreciation
o Poor infrastructure
o Poor educational system
o High cost and complicated taxation system
o High interest rates
o Corruption
Opportunities:
o They have the opportunity to lower the interest rates
o Fix their infrastructure and educational system
o Increase domestic production
Threats:
o Currency wars
