Brazilian Economic Conditions Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Brazilian Economic Conditions Case Solution

Abstract

The report talks about the current economic conditions of Brazil in relation to its currency emission, inflation, GDP, public deficit, foreign investment, and their influences on each other. The major change caused in the overall economic conditions of the country is due to the change in the leadership of the country. When Mr. Michel Temer joined as a vice president of Brazil, the steps taken by the new president resolved various issues that existed under the leadership of President Dilma Rousseff. It can be seen that the first quarter of 2016 provided favorable results in terms of stabilization of inflation as compared to the previous years and increased the gross domestic product of the country. However, the country was suffering worst recession since a very long time, which caused a number of economic issues for the country. With the help of economic program initiated by Michel Temer that mainly focuses on increasing public spending of the country, which was even higher from the overall gross domestic product. He proposed that in order to improve the worst historical economic conditions, the country should reduce or at least freeze its overall public spending, which is increasing by 6% over the historical years. In addition to this, the country in order to reduce its budget deficit, should increase its tax rate that is to be charged and this could also result in lowering the long term interest rate from the banks. The historical results are quite alarming for the country; therefore, re-election was highly required for a new leader who could come up with new and innovative plans to run the country and resolve the issues.

Keywords:

GDP, currency emission, inflation, public deficit, foreign investment and their influences.

Introduction

The underlying country in our research report is Brazil, who was under colonial rule of Portuguese Empire for a very long time and gained independence in the year 1822. Then with the passage of time, the country significantly gained good financial health by pursuing industrial as well as agricultural growth, which helped in gaining the recovery from the worst conditions in the past. Recently, the country was considered as the strongest emerging market and was leading towards success.

In the year 2013, the country suffered a heavy recession, which hampered the overall economy and resulted in high unemployment rate as well as high inflation in the country. Coupled with so many issues, the country was also faced with the issue of disloyalty from its president Dilma Rousseff because of the Petrobras scandal, which claimed that President was involved in corruption and disguising the actual deficit of the country to show better performance. Thus, the controversy ended the presidency of Dilma Rousseff in May 2016 and currently, Mr. Michel Temer is acting as the president of the country. (Bouzanis, Brazil lingers in recession, although GDP contraction moderates in Q1, 2016)

Analysis

Under the new leadership of Mr. Michel, the country is trying to resolve its existing economic conditions by critical and innovating economic programs initiated by the new president. Due to the increased currency emission by the Central Bank, the country was facing hyperinflation, which was ultimately causing the overall contraction in the gross domestic product.................

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Brazilian Economic Conditions Harvard Case Solution & Analysis