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The International

Economic Environment of
Brazil

Ms. Joyner Gwendolyn Rodrigues.


Student Number – 3769537
The International Economic Environment of Brazil

UNIVERSITY OF WOLLONGONG in DUBAI


College of Business

Project report

Title: The International Economic Environment

Of Brazil

in partial fulfilment of requirement of the subject:

TBS983 International Business Economic


Environment

for the MIB Program Autumn 2009

By

Ms. Joyner Gwendolyn Rodrigues

Student ID: 3769537

Submitted to: Dr. Gwendolyn Rodrigues

Date: 31st March 2010

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The International Economic Environment of Brazil

EXECUTIVE SUMMARY
The largest country in South America, Brazil is a country blessed with abundance
natural resources and manpower. Being surrounded by the Atlantic Ocean to it east, the
country has an advantage for international trade unlike land lock countries.

Brazil’s economy has seen many ups and downs during the different periods of
globalization. Being a labour intensive country from the first wave of globalization has been
engages in agriculture sector and manufacturing of consumer goods. The country’s economy
has grown substantially in last few years. Speculations are been made that Brazil may emerge
as one of the leading and powerful economies by 2050.

Brazil an active full member of the Southern Common Market (MERCOSUR), the
prime trading bloc in South America along with the World Trade Organization. The
European Union and USA are the country’s trading partners. Brazil exports and imports a
variety of goods and services, to and from different parts of the globe. Recently ethanol
stands as it major produce goods and export.

In terms of its GDP, Brazil continues to open up at a steady pace between 25% to
28%. In 2009, Brazil’s Gross Domestic Product was value at USD 1,543.7 billion and in
accordance with the World Bank, It comprise 2.60% of the world economy.

The surplus in Brazil’s Current Account during 2003 – 2007 , pooled together with
the surplus in the Capital And Financial Account ever since 2006, has permitted a substantial
buildup of foreign exchange reserves which is estimated at more than 200 USD Billion in
2008.

The country is one amongst a small number of countries in up-and-coming world


market can who can survive global crises with no fear about increasing interest rates or
implementing other disaster measures. This clearly shows that even at a slower pace the
Brazil is rising and stirring forward as a powerful future economy.

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The International Economic Environment of Brazil

TABLE OF CONTENTS
Chapter 1. Introduction to Brazil. Pg 6 – 8
1.1 Socio – Cultural Environment Pg 7

1.2 Legal Environment Pg 7

1.3 Economic Environment Pg 7

1.4 Political Environment Pg 7

1.5 Technological Environment Pg 8

Chapter 2. The Influence of Globalization on Brazil Pg 9 – 14


2.1 The Waves Of Globalization Pg 9

a. First Wave: 1870 – 1914 Pg 9

b. Second Wave: 1945 – 1980 Pg 10

c. Third Wave: 1980 – Present Pg 11

2.2 B R I C Pg 13

Chapter 3. Brazil’s International Trade Pg 15 – 22


3.1 Trade Policy Pg 15

3.2 Trade Balance Pg 16

a. Exports Pg 18

b. Imports Pg 19

3.3 Openness Index Pg 20

3.4 Direction Of Trade Pg 21

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The International Economic Environment of Brazil

Chapter 4. Economic Indicators of Brazil Pg 23 – 25


4.1 Gross Domestic Product Pg 23

4.2 Balance of Payments Pg 24

Conclusion And Recommendations Pg 26

References Pg 27 - 29
6.1 Gross Domestic Product Pg 27

6.2 Print Pg 28

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The International Economic Environment of Brazil

CHAPTER ONE
INTRODUCTION OF BRAZIL
Located in the southern hemisphere, the Federative
Republic of Brazil (Brazil) is the biggest country in the
continent of South America with total area of 8,456,510 sq
km. The Atlantic Ocean, is to the east of Brazil, to its north
French Guiana, Suriname, Guyana, and Venezuela, while
Colombia is to its northwest. To Brazils west we have Bolivia, Peru, Argentina and Paraguay
and to its south we have Uruguay.

Before its independence in 1822 Brazil was a colony of Portugal. Since its Republic
in 1889, the Brazilian Constitution defines the country as Federal Republic. Inaugurated in
1960, Brasília, till
date remains the
capital city of
Brazil. Today
Brazil is also one
the future BRIC
countries of the
world. The
SLEPT analysis of
Brazil will give
deep insight to the
country.

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The International Economic Environment of Brazil

1.1 Socio – Cultural Environment

Brazil is a land which comprises of immigrants from a mixture of ethnic groups


worldwide, which led to the formation of the heterogeneous Brazilian culture. In the region,
around 210 languages are spoken out of which Portuguese and English are the main
languages. The Brazilian ethnicity has been fashioned not only by the Portuguese, but also by
the country's inhabitant Indians, and other immigrants from Europe, African, the Middle East
and Asia. (Global Aware, 2010)

1.2 Legal Environment

The Brazilian legal system is based upon the Federal Constitution. It is the primary
law of Brazil. Different states within the country have law of their own. Beside the main
Federal Constitution the main legal documents in Brazil are the Brazilians codes like the
Civil Code, the Tax Code, and the Penal Code. The legal arrangement is of Roman practice
and all laws are ordained to control and regulate all kinds of situations. (Graziele, 2009).
Investors, who would want to invest, must understand both industrial as well as regional
differences within the country.

1.3 Economic Environment

Brazil is a country which is largely characterized by its developed agricultural


sectors as well as it developing industries. With the support of the World Bank, the country is
emerging as the future leading economies of the world. The country has gradually enhanced
macroeconomic stability, strengthening foreign reserves, decreasing its debt, working to an
inflation objective, and also committing to fiscal dependability. (CIA – World Factbook,
2010). In spite of the global regression which hit during 2008, Brazil economy emerged as a
new and strong market. Brazil has a current GDP rate of 18% and in 2009 Brazil had a
nominal GDP of USD 1,543.7 billion. (EDC, 2010).

1.4 Political Environment

Due to the political environment which is conductive to growth, Brazil has emerged
into an astounding economy. President Lula da Silva, elected in 2002, campaigned a policy
emphasizing on public and community programmes and alter political policies. High levels of

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The International Economic Environment of Brazil

corruption, thus social unrest among the majority of Brazilians. (Graziele, 2009). The
government of Brazil is a democratic republic government.

1.5 Technological Environment

In the previous 25 years, Brazil has emerged as the largest scientific and
technological environment in Latin America. In order to stimulate technology and science
within the masses, the Brazilian government laid the Innovation law, which provided a legal
structure needed to improve Brazil’s capacity to produce and commercialize technology.
(W.I.P.O, 2008). Strong and concentrated public R&D structure, within the country has given
a significant boost to private – public sector participation. The support of the government has
lead Brazil to improve on its infrastructure, communication and I.T sectors.

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The International Economic Environment of Brazil

CHAPTER TWO
THE INFLUENCE OF
GLOBALIZATION ON BRAZIL
Globalization is not a current occurrence. It has been in motion since the beginning of
trade. Because of its new term, we misunderstand it as a new phenomenon. Globalization –
An in progress course of action by which societies, cultures, and economies of different
countries have been integrated through communication, technology and trade. In this book,
‘The World Is Flat’, Author Thomas Friedman states that the world is no longer a round
globe, but a flat levelled playing field; where all the countries of the world are activate
participants, not just USA and Europe.

2.1 The Waves Of Globalization

a. First Wave: 1870 – 1914

The foremost wave of globalization occurred for the duration of 1870 till
1914. It was triggered because of the decrease in transport costs and new technologies
along with the lessening in tariff barriers. During that time, falling shipping costs
reduced the natural barrier of distance, contributing to a rise in merchandise trade to
levels comparable to today and also facilitating the emigration. (Reflections on the
Impact of Globalization, Aninat E et al, 2001). For the duration of this period, Brazil
and other South
American Countries
was a destination for
labour, and thus
manufactured goods.
Moreover because of
the abundance of land
in Brazil, the country
engaged agricultural
occupation primarily

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The International Economic Environment of Brazil

plantation of coffee. The bang in coffee manufacturing brought almost many European
immigrants, and also brought about the country’s Republic. Export of food grains and
raw materials to the industrial economies brought money into the country.

b. Second Wave: 1945 – 1980

Post Second World War era gave rise to a fresh wave of globalization, which took
place between the eras of 1945 to 1980. The continuous decrease in transportation cost
helped to further promote the expansion of international trade. This in turn improved
income levels worldwide. Multilateral organizations, such as GATT and the IMF,
contributed to this trend, helping countries to see integration as a two-way street, and
providing a safety net for countries embracing openness. (Reflections on the Impact of
Globalization, Aninat E et al, 2001). Brazil’s GDP 1929 was around US$ 900 (1996 US$
dollar), however 1980 GDP reached around US$ 5,400 (at 1996 US$ dollars). (The
Brazilian Economy – 1928-1980, Marcelo de Paiva Abreu, 2000). In 1979 agricultural
employment reduced to 30.2% and manufacturing employment increase to 20.6%.
Employment or under employment in the services sector rose from 22.3% to 50.8%. (The
Brazilian Economy – 1928-180, Marcelo de Paiva Abreu, 2000) The export-GDP ratio
chop down to 10% post the Second World War. In the mid-1960’s it was more or less
4%. Gradually after 1964 the ratio progressively rose and achieved 8.3% by 1980. (The

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Brazilian Economy – 1928-1980, Marcelo de Paiva Abreu, 2000). The import GDP-ratio
reached minimum values of 4.3% in 1953 and 4.1% in 1964. For most of the 1960’s and
1970’s the ratio was below 7%. Nevertheless, due to the steep rise in oil prices, in 1974 it
was 11.3% and in 1980 it was 9%. (The Brazilian Economy – 1928-1980, Marcelo de
Paiva Abreu, 2000).

c. Third Wave: 1980 – Present

Since the 1980’s we are breathing in a latest wave of globalization. Characterized


once again a technological revolution, the latest wave has seen and is still seeing the
continuous expansion in variety and value of services that are been traded along with
mercantile trade. In 1980 there was a visible change of path for the Brazilian economy In
the 1900s that change and the growth in the economy became outstanding. At the start of
this era, the government made efforts to reduce high tariff protection from 57.5% in 1987
to 32.4% in 1989. (The Brazilian Economy – 1980-1994, Marcelo de Paiva Abreu,
2004). Trade liberalization and the privatization of public-owned assets in 1993-94,
concentrated inflation on a continuous foundation. (The Brazilian Economy – 1980-1994,
Marcelo de Paiva Abreu, 2004). In Brazil suffered its worst recession in 1981-1983, its
GDP was knocked down 4.9% from its peak in 1980. The level of economic activity in
terms of GDP was on the rise on an average 7% in 1984. (The Brazilian Economy – 1980-
1994, Marcelo de Paiva Abreu, 2004).

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The years 1993 and 1994 were excellent years for the Brazilian economy in terms
of GDP growth which was at 4.9% and 5.8%, the maximum from the time in 1986.
During these years trade surplus was US$ 13 billion and US$ 10 billion respectively
inflow of foreign direct investment in 1994 was US$ 8.1 billion in 1994.

15 January 1999 – The Cardoso government stated that the REAL would not be
pegged to the US dollar. This led to the devaluation of the REAL by 45%. Regardless of
the devaluation, the economy showed optimistic. Brazilian exports became more
aggressive, which led to the increase in export income by 2000. GDP grew by 4.5%.
Progress nevertheless, fell to 1.4% in 2001 due to the US recession which resulted in the
international decelerate rate of export demand.

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The International Economic Environment of Brazil

2.2 B. R. I. C

BRIC is the short form for the economies of Brazil, Russia, India and China
collectively. The term was
original used by Jim O'Neill
of Goldman Sachs in 2003.
The Goldman Sachs report
speculated that by the year
2050, these four economies
would be richer than the
majority of the existing
foremost economic powers today. In less than 30 years from today the BRIC economies
together would be larger than USA’s economy. By 2025, the BRIC economies speculate to be
larger than the G6 economies i.e. the economies of The United states of America, United
Kingdom, Japan, Italy, France and Germany. The BRIC nations represent 40 percent of the
world’s population and together, a growing economic force.

Brazil is most alike to


its BRIC equivalent Russia
and unlike from China and
India. Brazil started its own
ethanol program based on its
wealthy sugar produce.
Brazil using deep-sea
drilling methods has opened
its own offshore oil
exploration. It’s gained an
extraordinary quantity of
energy self-reliance which
sets it apart from a large
amount of the world. Plus,
the primary strength of Brazil, its merchandise is expected to witness the region’s increase in
strength to become the one of the world’s principal economy by 2015. (The Brazil BRIC:
Ready to Shine, Ellis C, 2009).

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CHAPTER THREE
BRAZIL’S INTERNATIONAL TRADE
In the present world situation, a single country cannot exist in economic isolation.
Every aspect of a countries economy is linked with the economy of other country or
countries. This linkage takes shape in the form of international movement of goods and
service or in other words in the form of international trade.

3.1 Trade Policy

Ever since 2004, when World Trade organization reviews the Brazilian Trade Policy, the country has
sustained with the slow but sure modernization and reformation of its trade system. The government
has also escalated its average tariff protection. The Brazilian government also have improved on
ideas to encourage market competition and an efficient distribution of resources.

Multilateral trade arrangements are the core the Brazilian Trade Policy. Brazil is a member as well as
an active participant in the world trade organization. The country was also an active member of the
GATS negotiations on telecommunications and on financial services. (W.T.O, 2009). The country has
also been participating in the improvement of Aid-for-Trade, where it plays a twofold role of a
recipients as well as a donor. (W.T.O, 2009).

Brazil an active full member of the Southern Common Market (MERCOSUR), the prime trading bloc
in South America. In terms of value of trade, this is the country’s most prefer trade arrangement.
Never the less, only 10% of it total trade take place with MERCOSUR.As part of MERCOSUR,
Brazil has preferential trade agreements with Bolivia, Chile, Colombia, Cuba, Ecuador, Mexico, Peru,
and Venezuela. (W.T.O, 2009). Along with MERCOSUR, Brazil also has joint agreements with a
small number of LAIA members. (W.T.O, 2009).

In an attempt to simplify and refashion its customs measures, Brazil, For example, introduced a fast
import declaration system for regular importers, and also modernized procedures for inspection.
(W.T.O, 2009).

Brazil has increased its overall tariff protection from 10.4% in 2004 to 11.5% in 2008. The maximum
rate of 35% applies to 4% of all tariff lines, counting, textiles, motors vehicles, clothing, and tyres. All

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The International Economic Environment of Brazil

tariffs applied by Brazil are ad valorem. (W.T.O, 2009). The countries entire tariff agenda is at a
standard of 30.2. (W.T.O, 2009).

3.2 Trade Balance

A countries trade balance is between its monetary value of exports and import. It
comprises of the largest section of a country's balance of payments. Debit imports, as there is
an outflow of money. Credit exports, as there is an inflow of money to inflow of money into
the country. A trade balance is deficit if it imports exceed exports and is surplus if exports
exceed imports.

As seen
in the Graph
below, at the
start of year
2009, the
Brazilian
economy had a
deficit in its
trade balance
by 530.0 USD
Million, however during the year the country started exporting more than importing and thus
by the end of the year, the country has a trade balance of 25,328USD Million. Figure – V.3
Trade Balance – FOB of Brazil, shows us that by the end of the year 2009, exports were at
the value of 152,995 USD Million and its imports were at the value of 12,664 USD Million.

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Economic Indicators M ar 24, 2010

V.3 - Trade balance - FOB

US$ millio n
P erio d Expo rts Impo rts B alance

M o nth Year 12 mo nths M o nth Year 12 mo nths M o nth Year 12


mo nths
Value % Value Value % Value % Value Value %
1/ 1/ 1/ 1/
change change change change

2005* Dec 10 916 18.5 118 529 118 529 22.6 6 560 15.4 73 600 73 600 17.1 4 356 44 929 44 929
2006* Dec 12 265 12.4 137 807 137 807 16.3 7 213 9.9 91351 91351 24.1 5 052 46 457 46 457
2007* Dec 14 231 16.0 160 649 160 649 16.6 10 592 46.9 120 617 120 617 32.0 3 638 40 032 40 032
2008* Dec 13 817 -2.9 197 942 197 942 23.2 11501 8.6 172 985 172 985 43.4 2 316 24 958 24 958

2009* Jan 9 782 -26.3 9 782 194 447 19.3 10 311 -16.5 10 311 170 942 37.3 - 530 - 530 23 506
Feb 9 586 -25.1 19 368 191234 15.5 7 825 -34.5 18 137 166 815 29.1 1761 1231 24 419
M ar 11809 -6.4 31178 190 430 15.2 10 053 -13.5 28 190 165 242 25.9 1757 2 988 25 189
Apr 12 322 -12.4 43 499 188 694 13.0 8 627 -30.0 36 817 161542 19.4 3 695 6 683 27 151
M ay 11985 -37.9 55 484 181375 5.1 9 348 -38.6 46 165 155 664 10.6 2 636 9 319 25 711
Jun 14 468 -22.2 69 952 177 249 -0.5 9 862 -37.8 56 027 149 660 1.6 4 606 13 925 27 589
Jul 14 142 -30.9 84 093 170 940 -7.3 11229 -34.4 67 256 143 766 -6.5 2 913 16 838 27 174
Aug 13 841 -29.9 97 934 165 034 -12.7 10 775 -38.2 78 031 137 094 -14.1 3 066 19 904 27 940
Sep 13 863 -30.7 111798 158 880 -18.5 12 539 -27.3 90 570 132 374 -20.3 1324 21228 26 506
Oct 14 082 -23.9 125 879 154 449 -21.9 12 753 -25.8 103 323 127 943 -25.2 1328 22 556 26 506
Nov 12 653 -14.2 138 532 152 350 -23.2 12 039 -8.2 115 362 126 863 -26.3 614 23 170 25 486
Dec 14 463 4.7 152 995 152 995 -22.7 12 285 6.8 127 647 127 647 -26.2 2 178 25 347 25 347

2010* Jan 11305 15.6 11305 154 518 -20.5 11471 11.2 11471 128 807 -24.6 - 166 - 166 25 711
Feb 12 197 27.2 23 502 157 129 -17.8 11803 50.8 23 275 132 785 -20.4 394 228 24 344

So urce: M DIC/Secex

1/ Change from the same period of the previous year.


* Preliminary data.

N o t e: On July 10, 2007, export data from December 1999 on were revised so as to include exports registered by Simplified Export Declaration (DSE).
See methodology on: http://www.desenvolvimento.gov.br/arquivo/secex/exportacoes-por-DSE.doc.

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The International Economic Environment of Brazil

a. Exports

The fast-growing Brazilian economy is fuelled by its exports. Brazilian is one


of the largest exporting countries in the world with an export value of 152,995 USD
Million at the end of 2009.

The country is the world’s foremost exporter of agricultural and food based
goods like Soybeans, oranges, rice, sugar, coffee, Brazilian nuts, beef and orange
juice. Since the country is a labour intensive one, its exports also include shoes and
other leather produces motor vehicles, electric equipments, transportation equipments
and many more. Due to it abundance in natural resources, Brazil’s also exports wood,
iron ore and crude oil.

As seen in the figure along side, the major part of the Brazilian exports is
contributed by the European Union and North America

Brazil is the second leading manufacturer of ethanol and the primary exporter
of ethanol too. In 2008
Brazil manufactured 27
million cubic meters in
of ethanol fuels
(anhydrous and
hydrated ethyl alcohol)
Exports reached 4.2
million cubic meters in
2008 ( W.T.0, 2009).

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b. Imports

Brazil is more of a labour intensive country than a capital intensive one, thus
Brazilian exports are labour intensive good like agricultural produce, while its
imports are capital intensive good like technology, machinery and foreign direct
investments. In mid 2008, Brazilian FDI was about 45 USD Billion. In order to
produce better goods to supply domestically and internationally, the country
major imports include industrial capital gods from USA and Europe. Brazilian
main imports consist of Machinery and Equipment (26%) and Chemicals (16%).
(EDC, 2010). Imports were at the value of 12,664 USD Million at the end of
2009.

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3.3 Openness Index

Openness index is a marker of how much the country participates in the globalization.
It relates to the international trade of the country i.e. exports and imports in the country’s
economy. Openness index of a country is the shown as the nation’s exports plus imports as a
percentage of its GDP.

(𝑬𝒙𝒑𝒐𝒓𝒕𝒔 + 𝑰𝒎𝒑𝒐𝒓𝒕𝒔)
𝑶𝒑𝒆𝒏𝒆𝒔𝒔 𝑰𝒏𝒅𝒆𝒙 =
𝑮𝑫𝑷

Exports And Imports Of Goods And Services


Of Brazil’s As A Percentages Of Gross Domestic Product.
Exports as a Imports as a Exports plus imports
Year percentage of percentage of as a percentage of
GDP GDP GDP
2000 10 12 22
2005 15 12 27
2007 14 12 26
2008 14 14 28

Source – The World Bank Group

The Graph below shows the openness of the Brazilian economy from 2000 to 2008. As we
can see the economy continues to open up at a steady pace between 25% to 28% in terms of
its GDP. We thus conclude that Brazil plays a very important role in international trade.

Openness Of The Brazilian Economy


Exports plus imports as a percentage of

30

25

20
GDP

15

10

0
2000 2005 2007 2008
Years

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3.4 Direction Of Trade

The main destination for Brazilian exports is the European Union. According to the
year 2008, the share of the European Union in Brazil’s exports is nearly 21.4% and it
generates about 32 Million Euros. Likewise with its imports Brazil imports most of it good
from the European Union at 31Million Euros. The European Union imports consist of 23.5%
of the Brazils total imports in 2008.

Following the European Union, the USA is Brazils next big trade partner with and
export share of 15.2% and import share of 14.7% n generating about in 23 Million Euro in
exports and 19 Million Euro in imports. China and Argentina follow close by. China has an
11.8% share in Brazil’s total export at 18 Million Euro while Argentina has 8.1% share at 12
Million Euro.

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CHAPTER FOUR
ECONOMIC INDICATORS OF BRAZIL
The two main indicators of a country’s economic stability and situation are its Gross
Domestic Product or GDP and the countries Balance of Payment statement.

4.1 Gross Domestic Product

A country’s Gross Domestic Product is the country’s fundamental measurement


which shows its overall economic yield.

One of the fastest mounting up-and-coming economy worldwide, Brazil’s economy


position itself as the uppermost economy in South American. The country has acquired a
strong position not only among the South American countries but also among global
economies. In 2009, Brazil’s Gross Domestic Product was value at USD 1,543.7 billion and
in accordance with the World Bank, It
comprise 2.60% of the world economy.

The Brazilian economy recovers


from a short lived recession due to the
global crisis and came out of it within
two quarters in 2009. In the third quarter
of 2009, the GDP expanded by 1.3%.
The GDP is expected to grow 5.0% in
2010 and 5.2% in 2011. (EDC,2009).

In the year 2009, Brazils


agricuture sector contributed 6.5% of its
total GDP, while the manufacturing
industry and service sector contributed
23.8% and 67.7% respectively. (CIA –
World Factbook, 2010).

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4.2 Balance of Payments

When Trade takes place between two countries, the transitions involved are recorded
in a statement a financial statement known as Balance of Payments. In international trade a
transaction is the exchange of goods and services between the residents of one country and
other resident’s i.e. individuals, business firms and government bodies from different
countries worldwide.

During 2003 – 2007, Brazil showed a surplus in its current account of the Balance Of
Payments. However it’s in the first half of 2008 was a deficit of 17 USD Million. This
occurred as the increase in imports of goods and services did not correspond by the increase
in exports. (W.T.0, 2009). Being a labor intensive country its primary involved in
manufacturing and agricultural sector thus usually it has a deficit in its Services Balance. Due
to the swift increase in imports compared to the exports, the volume of this deficit has been
getting bigger. Remittance of profits, compensations and other investment income of the
Brazilian economy are linked to foreign investment i.e. outflow of income which exceed the
inflow of income. Thus the Income Balance in Brazil’s Balance Of Payments shows deficits.
(W.T.0, 2009). Overall, the Current Account In Brazil’s Balance Of Payments show a surplus
over the years because of it trade balance which is also been positive, but in 2008 due to the
global crises, the swift increase of imports did not match its export and even though a
positive value in its 2008 Trade Balance, which was a small positive value, led to a deficit in
its Current Account n 2008.

From 2005 to 2008, there was surplus and a steady increase in the Capital and
Financial Account in the Balance Of Payments of Brazil. This surplus was caused but the
increase of Foreign Direct Investment in Brazil which was estimated at 18,822 USD Million,
34,585 USD Million, and 16,702 USD Million in the year 2006. 2007 and 2008 respectively.

The surplus in Brazil’s Current Account during 2003 – 2007 , pooled together with
the surplus in the Capital And Financial Account ever since 2006, has permitted a substantial
buildup of foreign exchange reserves which is estimated at more than 200 USD Billion in
2008. W.T.0, 2009).

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CONCLUSION AND
RECOMMENDATIONS
The latest global crisis of 2007 – 2008 has revealed to the globe a Brazil that is an
emerging and larger economy for the future. Structuring on sound macroeconomic policies
and taking benefit from the international economic surroundings, it is evident that the country
has done its monetary, fiscal and economic homework and changed some important aspects.
The country is one amongst a small number of countries in up-and-coming world market can
who can survive global crisis with no fear about increasing interest rates or implementing
other disaster measures. This clearly shows that even at a slower pace the Brazil is rising and
stirring forward as a powerful future economy.

Speedy weakening of its Current Account Balance will make the country more open
to unfavourable financial conditions. The government requirements to avoid the development
of asset bubbles within its economy. More investment is need in the country in order to bring
about more economic stability and development into Brazil. Thus the Brazilian government
need to make some structural and financial adjustments to bring exporters and investors into
the country. Moreover, Brazil has always been a tourist attraction mainly because of its
events like the carnival and various football game. Hence the country’s government should
promote and develop such event which will promote tourism into the country. Nearly quarter
of Brazil’s land mass is under the Amazon jungle, governmental protection polices to
preserve and conserve wildlife along with nature, will also promote tourism income to the
country.

Being the world fourth largest populated country, Brazil must make use of it manpower
engage in labour intensive sectors like agriculture, machinery, ship building and other good
producing industries. The government should give incentive to promote the development of
these sectors. The country must increase its exports more rapidly than imports in other to
maintain a healthy Trade Balance.

Brazil economy growth is like rags to riches story. And this story will continue as the
country has transformed itself and will continue to do so, from a ‘Cane Basket’ to a ‘BRIC’
(Brick).

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REFERENCES
6.1 Electronic

Brazil Direct, (2006), Brazil Direct - Economic and Political climate [ONLINE] Available at:
http://www.brazildirect.org/economic.html [Accessed 17 March 10].

CIA - The World Factbook, (2008), CIA - The World Factbook - Brazil [ONLINE] Available
at: https://www.cia.gov/library/publications/the-world-factbook/geos/br.html [Accessed 17
March 10].

Edc.ca, (2010), Brazil [ONLINE] Available at: http://www.edc.ca/english/docs/gbrazil_e.pdf


[Accessed 04 March 10].

Encyclopedia of the Nations, (2002), Brazil – Economy, [ONLINE] Available at:


http://www.nationsencyclopedia.com/Americas/Brazil-ECONOMY.html. [Accessed 19
March 10].

Goldman Sachs Global Economics, (2009), BRICs Lead the Global Recovery, BRICs
Monthly, [ONLINE], Issue No: 09/05, Pg 1 – 4, Available at:
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