Political Issues in Emerging Economies - Essay Example

Download file to see previous pages The Brazilian economy has a strong domestic services sector, which accounts for about 67 percent of the country’s GDP. Major growth areas include insurance, financial intermediation, and retail sales. According to UK Trade and Investment (2012), about 35 million Brazilians moved from Classes D and E to Class C between 2002 and 2012. Consequently, has marked the major economic growth rates, which resulted in a reduction of economic inequalities. In effect, this had an effect of increasing demand from the middle class, an increasing tendency to spend, and provided a major economic opportunity for companies – local and foreign. Partly due to the emerging class of middle class consumers, the Brazilian economy grew by 2.7 percent in 2011, which is lower than the 7.5 percent realised during 2010. Due to these economic changes, there have been efforts that implement policies to contain the increasing inflation since unfavourable global economy has resulted in a retardation of the economy (UK Trade and Investment, 2012). On the other hand, the slowdown contributed to a reduction in basic interest rates in order to boost growth through passing the reductions to consumers and businesses. Importantly, the labour market conditions are relatively favourable, at 6 percent, which is very comparable to the economies lowest. However, local labour regulations are onerous and complex. Therefore, it is important for foreign market entrants to handle them carefully in order to evade costly liabilities. The exchange rate of Brazil was affected to a large extent by the uncertainty in the global economy/ In mid 2012, the Real Dollar slumped from a ratio of 1: 1.73 against the USD to a rate of USD 1: 2.02 (UK Trade and Investment, 2012).
In the area of trade, Brazil has remained balanced, but a comparatively closed national economy. The total of trade flows stood at about 25 percent of the economy’s GDP. Brazil’s exports stood at USD 256 billion in 2011 with the major exports being fuel and oil, ores, soybean, transport produce, ethanol, meat, sugar and chemicals. In 2011, the economy’s major consumers were China and US with these two countries representing 17.3 and 10 percent of total exports respectively (UK Trade and Investment, 2012). Other principal consumers include Argentina at 9 percent; Japan at 3.7; and the Netherlands at 5.3 percent. Brazil’s imports stood at USD 226.2 billion for the year 2012. Major imports included chemical products, machinery, automotive parts, oil, electronics, transportation equipment and electrical appliances. The larger ...Download file to see next pagesRead More