Such economic terms: 6.5% Inflation, 0.6% growth, 8% Interest rates, lower foreign investments and higher public debts, give an idea of what is going on with the largest economy in Latin America and 7th globally.
Let’s start revealing the node.
FT reported Brazilian economy strategies, even on small scale as our friend Robert Lima da Silva when his existing debts account for about 2/3 of his monthly income hold him from buying a new motorbike.
When millions of new lower-income consumers took advantage of easy access to loans to buy a new Honda or Yamaha. 2012, however, that changed as consumer credit became harder to secure, causing production to plunge by more than a fifth. It is a trend that has continued into this year.
The same story can be concluded on cars credits, home applicants and even government attempts to cut industrial and residential electricity bills to reduce so-called “Brazilian life cost”. So what’s Brazilian Government alternative strategies.
Mr. Mantega blamed the economic terms and conditions that Brazil had overcome. From global crises, currency wars, to foreign fund tsunami in 2012 to excuse his 2,7% in 2011 and 0.9% 2012 weak GDP growth, while forgetten Brazil Inflation which Runs Strong, and Interest Rates May Rise in 2013.
What Brazil really needs to fuel its internal engines of growth?
“For Brazil, the issue is that consumer spending, which for years was the driver of growth, can no longer continue to increase at rapid rates,” said Capital Economics, a London-based research house.
But the people are enough with high prices and even worse. what about the 6.5% inflation rate! who fueled the inflation?
Petrobras, with government blessing, raised the fuel prices and led the inflation in Brazil to more than 6.5%. Brazil’s central bank chief Alexandre Tombini said:
Fighting inflation is key to bolstering confidence in the Brazilian economy, which is showing signs of picking up pace with stronger investment this year.
So the answer is more investment! but where?
particularly the investment in 2 main sections: Education to sustain the future, and Infrastructure to feed the present uprising giant mid-class, 35 millions beyond the 2014 & 2016 sport events.
Open equal free reported a gap in Brazil Education system where only 17% of Brazilians aged 18-24 enrolled in a university degree program or having obtained a diploma.
Brazilians, on average, receive only 7.3 years of schooling, according to government statistics, and less than half of workers have finished high school. In 2009 the OECD ranked Brazil 53rd out of 65 countries in math and literacy skills.
The lack of skilled and qualified workers keep “Brazil running a great risk of losing its new position” in the global economy.
Brazil ranks 130th out of 185 countries on the World Bank’s Doing Business survey – below Bangladesh and Russia but above India. To avoid another year of slow growth (when Brazilian government invested 18% of GDP below than Mexico 21.5% and Chile nearly 24%) and to boost Brazil’s low investment ratio, the government launched a U$ 27 billion program to developed its ports infrastructure in 2013 ahead of 2014 World Cup and presidential election.
However, it’s not that easy says Reuters:
If you think you’re seeing light at the end of the tunnel for Brazil’s economy, look again: it’s just brake lights from a growing line of 18-wheelers.
It’s hard to believe a slowdown in Brazilian economy while Brazilians are reported as the second big-spending tourists in New York! In 2012, Brazilians became the second most important overseas market for the city after the UK: 826,000 Brazilians came to visit, compared with 112,000 in 2006.
The question remains unsolved: Brazil economic node, Where to start!