Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please can i get help on question 2 and 4 CLOSING CASE Brazil's Struggling Economy Between 2000 and 2012, Brazil had one of the fastest-

please can i get help on question 2 and 4 image text in transcribed
image text in transcribed
image text in transcribed
CLOSING CASE Brazil's Struggling Economy Between 2000 and 2012, Brazil had one of the fastest- growing economies in the world, expanding by over 5 percent per year. In 2012, the Brazilian economy tem- porarily surpassed that of the United Kingdom, making it the world's sixth-largest economy. Brazil's economie gains were partly due to booming international demand for commodities and high commodity prices. Brazil is a major exporter of coffee, soybeans, and iron ore. The country also benefited from strong domestic demand, cheap credit in international markets, inflows of foreign capital, tame inflation important in a country with a history of hyperinflation), and moderately conservative macro-economic policies. Since 2012, however, Brazil has been beset by a deep economic malaise. Economic growth decelerated in 2013. The economy entered into a serious recession in 2014. Economic activity contracted by over 3.5 percent in both 2015 and 2016 before grow. ing by a sluggish 0.7 percent in 2017 and just 1.1 percent in 2018 Brazil's economic problems were partly due to weaker demand for exports and a fall in global commodity prices In 2010, exports grew 11.6 percent, but that growth stalled 88 in 2012, and in 2014 exports contracted by 1 percent However, the country has other deep structural prob lems that led to a fall in do mestic demand. Under the leadership of President Dilma Rousseff and her left of-center Workers' Party, be tween 2011 and 2014 the government spent extrava gantly on higher pensions Po Vilela/Shutterstock and unproductive tax breaks for favored industries. When the economic slowdown hit, unemployment surged to over 12 percent and tax revenues slumped. As a result of higher outlays and lower tax revenues the fiscal deficit xwelled from 2 percent of GDP in 2010 to 10 percent in 2015. This pushed up total government debt to 70 per cent of GDP and required higher interest rates to sell gow. ernment bonds, which were seen as increasingly risky The government also raised interest rates to keep info tion in check, which historically has been a problem in Bari Because of high interest rates, the cost of servicing government debt expanded to 7 percent of GDP-and, of course, higher interest rates, by rising borrowing costs for consumers and businesses, further depressed eco nomic activity Given high interest rates, the only way for the govern me to get the fiscal deficit under control is to cut spend img and raise taxes. This has not been easy to do. A central problem in Brazil is the country's pension obli tion. The pension system entities Berians to retire on weg, at just 54. Pension obligations ready con for 15 percent of GDP. Without reform, the figure could haloon 25 percent by mid-century is the population In win, tarif barriers grotecting inefficient local enterprises from foreign competition. Isbor laws, and some tax laws have long been on a dragon the accomy. A typical manufacturing pends 2.0 hours year complying with the country's mascothe Latin American 356 Laboratoire en in en waren. And prominental com poductivity that Wandard Tomaten froze public spending in real terms for the next 20 years He also overhauled the coun- try's labor laws, making it much easier to fire unpro- ductive workers. Inflation moderated significantly, and a rise in commodity prices helped increase exports. This allowed the central bank to reduce interest rates to 6.75 percent (they were as high as 12 percent), further boosting economic growth. There was also a rash of privatizations including that of the leading electric utility, Eletrobras-as the government sought to raise capital by selling state assets and tried to increase the efficiency of the economy. What remains is to fix the country's pension problems. This would require raising the retirement age significantly. Temer ran up against strong resistance. His initial proposals failed to gamer enough votes in the Brazilian congress to change the law on pensions In October 2018, Brazil held elections. Temer's left wing Worker's Party lost the election. The victor, Jair Bol sonaro of the right-wing Social Liberal Party, ran on a wwand-order ticket, promising to fix Brazil's high crime mate. He also stated he would make necessary reforms to the country pension system SC MB Meer Til The Warrive T2.2012 Thai Case Discussion Outions 1 Brazil was seen as one of the worlash Erowing developing economies in the 2000-2010 period. What were the foundations of this access 2 Why did Brazione growth fater after 2012? How much of the damage wested, and how much was due to factors outside of the country's control What do you think of Temer me em Were they the track What do you think shoulder 89 of 15 G Search or type URL A & ) 6 7 8 9 C rate. He also stated he would make necessary reforms to the country's pension system. Sources: Denise Chrispim Marin, "Brazil's Half Glass Economy." Global Finance October 3, 2017: "Michel Temer Is Trying to Fix Brazil's Pension Systems." The Economist, February 15, 2018: "Will Brazil's Future Arrive?" The Economist, August 17, 2017; "Brazil's Fall," The Economist, January 2, 2016; Jeffrey T. Lewis, "Brazil Posted Lackluster Economic Growth in 2018." The Wall Street Journal, February 28, 2019. on m Case Discussion Questions al 1. Brazil was seen as one of the world's fastest- nd growing developing economies in the 2000-2010 period. What were the foundations of this success? 2. Why did Brazil's economic growth falter after Ty's 2012? How much of the damage was self-inflicted, 356 and how much was due to factors outside of the com- country's control? 3. What do you think of Temer's economic reforms? atters, Were they on the right track? uption 4. What policies do you think Brazil should adopt going forward to reignite economic growth? How Roussef casy would it be to implement these policies in he econ Brazit? Brazil in Design elements Modern textured halftone OVIPRESIONA/ President Shutterstock slobalDGE con globalEDGE: All others conomy. He com- y that of RON Moraw Hill Education 89 of 715

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance

Authors: Charles Francis Bastable

1st Edition

1375520083, 978-1375520089

More Books

Students also viewed these Finance questions

Question

=+(3.14) Q((HOA) U (HenB)) = P(HOA) +P (H'nB) for A, B E 70.

Answered: 1 week ago

Question

5. Understand how cultural values influence conflict behavior.

Answered: 1 week ago

Question

8. Explain the relationship between communication and context.

Answered: 1 week ago