Report Research Paper Example | Topics and Well Written Essays - 1500 words

Report - Research Paper Example.. 7 3. Summary.. 9 4. References 10 supplement The Brazilian Economy 1. Executive Summary Brazil has maintained considerable economic difficulties from 1900 to 2012 due to ineffective financial policy construction, government reforms, and an over-reliance on commodities to begin economic sustainability and growth. Historically, coffee and oil have been staple export products however, these commodities are subject to unpredictable spikes or decline in prices. At the same time, the consumer price index in Brazil is affected by eminenter-than-average fanfare due to rising emerge chain prices and interest rate fluctuations that limit consumer spending and investment. It is recommended that Brazil substitute its economy and return to the crawling peg monetary policy now that industrialization and consumerism are beginning to develop effectively in this country. 2. Background on Brazil and its Economy Brazil is currently experiencing significant econo mic growth due to changes governmental and economic reforms as well as its current maculation as a major contributor to the global trade system. The country, once overly reliant on coffee production and rail system fare to promote economic growth and job security, now maintains a growing industrial base in consumer products, industrial products and commodity development that contributes to a high GDP comparatively to other countries around the globe. Sixty seven percent of total GDP is attributed to the service sector, as it relates to health care, hospitality, beauty purvey and eating place (to name only a few). The rest of gross domestic product is allocated in agricultural development and industrial-based employment. Unfortunately, Brazil currently has a debt to GDP dimension of slightly 50 percent, which is much higher than that of other emerging or developing nations (Blanchard, 2005). At the same time, the inflation rate in Brazil is approximately four percent annually which impacts disposable income for consumers and also cash flow availability for companies in the industrial and agricultural sectors. High prices throughout the commodity supply chain, as one example, are offset by rising prices on corn, coffee and other commodity products used in the household sector. High inflation occurring annually since 2003, when the country experienced over 17 percent hyperinflation, continues to erode the governments ability to stimulate more economic and job growth. The provision of public services, such as electric, telephone services, and water consumption experienced inflation rates of 8.38 percent with supplementary tariff increases of over 15 percent on all of these services (Business News Americas, 2004). Brazil has not, even during years where inflation was reduced through economic policy and infrastructure development, experienced both significant decreases from these cost levels. As such, consumerism is reduced due to lowered disposable income f or consumer products. From 1990 to 1997, Brazil experienced inflation to the level where gross national product was consumed up to 40 percent due to rising prices (Selva, 2010). Further, credit card companies, in response to decreased consumer savings in banking institutions, began charging upwards of 25 percent for consumer and industrial purchases (Selva, 2010). The lack