Essay About Government Spending And Report Aims

Brazil Pestle Analysis
Brazil is a federal democratic republic, under the current presidency of Dilma Rousseff. Whilst other economies have faltered since the financial crisis, Brazil is known as one of four major developing economies (BRIC) which has led it to become the 6th largest economy in the world. However, in recent years, challenges with controlling macroeconomic objectives and the distribution of a growing GDP have changed the landscape of the Brazilian economy. This report aims to give a country analysis of Brazil, using the PESTLE framework, before considering industrieswithpositiveinvestmentoutlookstodesignasinglecountryfund. Political Rousseff’s government has been under heavy criticism domestically due to their prioritising of government spending on infrastructure solely for the upcomingWorldCupandOlympics,attheexpenseof public services for the growing middle class (Lewis, J. &Kiernan,P.2013).Thelackofgeneralinfrastructure investment is shown comparatively in Figure 1. If public pressures were to continue, it would be inevitable that spending on public services would increaseinthefuture. Whilst eradicating corruption has been a target for Brazil in recent years, many academics including Kurczy(2013)arguethatcorruptionhasnotimproved duetoalackofimplementationofpolicies,thuscomplicatingthebusinessenvironment.Brazilhas played a major part in the development of Mercosur and Unasul, earning international credibility andincreasedregionaltrade.(Sennesetal2006). Economic According to the IMF’s world economic outlook Brazil’s economy is the 6th largest in the world, with a GDP of US$ 2.5 trillion that is expected to grow by up to 4% annually until 2016 (MarketLine). It is the largest economy in Latin America, contributing 38.5% to the region’s GDP (Euromonitor2012). UnemploymentinLatinAmericaisestimatedat6.5%for2012(Worldbank),andis5.66%inBrazil (MarketLine), with Inflation at 4.1% and 5.28%. Hand in hand with the growing GDP of Brazil comes an ever_increasing middle class that demands goods and services, such as in retail or education.Thisgrowthinconsumerspending(Figure2)hasledtoheavyinflationarypressureson Brazil’sgovernment. Therecentriseinbanks’willingnesstolendhasresultedinlargehouseholddebts,reportedtobe 43% in 2012 (MarketLine). This has led to dramatic asset price increases, with concerns over a housing price bubble diminishing real estate stock prices, shown in Figure 3