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Brazil Macroeconomics Essay

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The country of choice is Brazil for the following reasons: it is a booming economy, which provides some stark contrast with the stagnation and ever-mentioned phrase ‘double-dip recession’ which now commonly used in the West. Macroeconomics is concerned with the study of aggregate economy, which embodies all nationally relevant economic indicators. The common indicators are the unemployment rate, the rate of inflation, the GDP per capita, economic growth, the economic cycle, and the labor force. Since 2003, Brazil’s economy has been growing steadily.

It has been improving its macroeconomic stability despite a small crisis in 2008 which saw its growth rate decline to 2.6%. In 2010 it grew by 7.6% amid renewed confidence from foreign investors. Part of the reason for this is the high interest rates which make it attractive to foreign investors. Note also that this was its highest growth in 25 years, whilst people especially given that many economies were struggling at the same time.

Furthermore, the continuing flows of investment into the manufacturing sector have provided greater backbone to the economy.

Note that a commonly cited reason for the economic struggle of the UK for example is its everlasting trading deficit. It does not export enough, it does not manufacture enough. With natural resources such as tin, clay, uranium, platinum, petroleum, cocoa, gold, wood, and hydroelectric power (and much more), Brazil is generally recognized as one of the naturally richest countries on Earth in terms of quantity and probably the richest in terms of variety of resources.

The subject being treated here is not a comparative analysis between Brazil, an emerging economy and the declining economies of the West. Comparative analysis will only be used briefly in order to further confirm the great performance of this economy since 2003. In the arena of macroeconomics, it is essential to look at things from a national and international standpoint and therefore the performance of one economy is not only relative to its past performance but also relative to other economies in the world.

In the past decade Brazil’s Government has combined fiscal policy has been used at times to stave off excessive inflation and encourage consumption. The reason why this has worked out is that in the long-run, the country has consistently been creating jobs both in the manufacturing and the services sectors, which in unison with fiscal policy have helped keep a lid on inflation in the past ten years. This point of success will be analyzed inn depth given that this country was previously known to have huge inflationary problems prior to the last decade.


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