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

Report - Research account Example.. 7 3. compact.. 9 4. References 10 APPENDIX The brazilian Economy 1. Executive Summary Brazil has maintained considerable economic difficulties from 1900 to 2012 due to ineffective financial policy construction, goernment reforms, and an over-reliance on commodities to drive economic sustainability and growth. Historically, coffee and oil have been staple export products however, these commodities be subject to temporary spikes or decline in prices. At the same time, the CPI in Brazil is affected by higher-than-average inflation due to emergent supply chain prices and inte ataraxis rate fluctuations that limit consumer spending and investment. It is recommended that Brazil diversify 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 shortly experiencing significant economic growth due to cha nges governmental and economic reforms as well as its period position as a major contributor to the global trade system. The country, once overly dependent on coffee production and rail system transportation to promote economic growth and trouble security, now maintains a growing industrial base in consumer products, industrial products and goodness development that contributes to a high gross domestic product comparatively to otherwise countries around the globe. Sixty seven part of total gross domestic product is attributed to the service sector, as it relates to health care, hospitality, beauty provision and restaurant (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 ratio of approximately 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 appro ximately four percent annually which impacts usable 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 go through over 17 percent hyperinflation, continues to erode the governments ability to stimulate more economic and course growth. The provision of public services, such as electric, telephone services, and water consumption experient inflation judge of 8.38 percent with supplementary tariff increases of over 15 percent on all of these services (Business news program Americas, 2004). Brazil has not, even during years where inflation was reduced through economic policy and infrastructure development, experienced any significant decreases from these cost levels. As such, consumerism is red uced due to lowered disposable income for 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