Brazil’s Economy and GDP: Analysis

The economic growth of any country is measured as the percentage rate of increase in the original GDP of a country. Brazil is the biggest country in South America. This country possesses developed manufacturing, mining, agriculture and services. The economy of a company is directly related to its GDP, any economic rise or fall will result in a rise and fall of the GDP as well. From 2003, the macroeconomic stability of Brazil has greatly improved; they created international services, reduced their debts, and have kept their inflation under control.  However, in 2007 and 2008 Brazil experienced great economic growth, astonishingly after that, they had to face a global financial crisis. (Economy watch)

Brazil though, was one of the first rising markets to be able to recover from their loss, with their GDP growth returning to back to its original level. The Central bank has predicted the growth to increase about 5% in 2010.  The economy of Brazil is the eighth largest by nominal GDP throughout the world.  The statistics taken in 2007 and 2008 shows that service sector was the largest element of the GDP of Brazil with 66.8%, followed by industrial sector with 29.7 % and the agriculture with 3.5%.   Many of the government officials felt that Brazil’s economy has not escaped the crisis safely.  The growth rates of Brazil in 2007 were 5.7% and then 5.1% in 2008 and in 2009, the GDP of Brazil dropped to 0.8% in the beginning of 2009.  (Economy watch)

To increase the GDP to the normal level, the government added U.S $100 billion to the liquidity in the local economy, taxes cuts were provided to the manufacturers and they reduced the central bank interest rates. This resulted in the growth rate of Brazil to be positive in the latter part of 2009 and 2010.  There has been a great reduction in the debt to GDP ratio as well, which resulted in upgrading Brazil to investment grade supreme ruler debt rating by the major rating companies.  Many of the market experts predict that the economy of Brazil will have to face higher debt servicing costs in the approaching years. The 5% GDP growth prediction in 2010, paired with a political policy is expected to initiate extensive societal spending and transportation projects, a failure in this would result in the high cost to the government in the next coming years.  (Wikipedia)

The central bank of Brazil stated that the public sector at the end of 2009 had a primary budget surplus of $3.4 million that accounted for 2.06 % of Brazil’s GDP. The surplus was well below the estimated surplus in 2008 of $59.49 million, which would be 4.1 % of Brazil’s GDP.  Below is the GDP per capita of Brazil from 2000 to 2009, from the graph we can see that from 2000 it 2002 it continued to grow, while after 2002 it started to decrease a little then increase again in 2005 till 2008 and finally decreased in 2009.