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Brazil

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  • Oehler-Șincai Monica Iulia

Abstract

In spite of the stimulus packages to invigorate the economic growth, industrial development and competitiveness, Brazil has been continuing the trajectory of modest growth rates, mainly due to the supply-side weaknesses. The long term boom of the raw materials prices had a significant contribution to the strengthening of the middle class. Nevertheless the production capacities, infrastructure and human resources did not benefit from an adequate level of investment. The total investment as a percentage of GDP is slightly higher than 18%, similar to the period 1980-2013 but lower than in the other BRICS countries, as a result of the fiscal burden and excessive red tape. However, government’s targets regarding infrastructure development, associated with hosting the 2014 World Cup and 2016 Olympic Games are ambitious. Diminishing unemployment, increasing wages, excessive subventions and the supply-demand imbalance generate strong inflationist pressures. Consequently, decreasing purchasing power, combined with a lower quality of the public services, corruption and excessive government expenditures for the World Cup are several arguments invoked by the population for the ample protests initiated in 2013, which continue at present as well. These should be carefully analyzed by the Brazilian politicians, responsible for adopting the necessary measures in order to spur the economic growth, such as labour reform, fiscal reform and cutting red tape.

Suggested Citation

  • Oehler-Șincai Monica Iulia, 2014. "Brazil," Conjunctura economiei mondiale / World Economic Studies, Institute for World Economy, Romanian Academy.
    • Handle: RePEc:iem:conjun:y:2014:id:2822000009585023
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    Keywords

    Brazil; macroeconomic indicators; GDP; inflation; unemployment; general government net lending/borrowing; gross debt; structural weaknesses;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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