Brazil's economy is shrinking since the recession started on 1990. Currently, Brazil is going over severe inflation increase, affecting all the other nearby countries in Latin America.
Throughout the news, the expected inflation rate in 2015 has risen from 7.27 to 7.33, as inflation rate of January has risen from 0.78 to 1.24. At the same time, annual price level has increased to 7.14 from 6.41, measured by analysts. The central bank has calculated that inflation rate of Brazil will be 4.5, within plus and minus of 2 percent.
Through the article, I would assume Brazil is going over a huge crisis through the economy. It seems it woould not be easy for Brazil to escape from such severe inflation and accelerated price level. Government needs to take a fast choices in order to fix such problems or it won't be fixed.
http://www.bloomberg.com/news/articles/2015-02-23/brazil-analysts-see-worst-growth-in-quarter-century-faster-cpi
2015年2月1日 星期日
Brazil Worst Budget Deficit Shows ‘Tougher Measures’ Needed
Brazil posted the biggest budget deficit in 2014 and the government is rolling out some tough measures to save this situation. Rousseff’s administration is raising taxes and cutting spending to narrow the deficit that is threatening the government’s investment grade status.
In addition, Standard & Poor’s in March last year downgraded Brazil’s credit rating to one level above junk, citing a slowdown in economic growth and deteriorating fiscal accounts. As a result, Rousseff’s government started an austerity program by reducing unemployment benefit costs and some pensions, capping the amount it can spend monthly and raising taxes on fuel, imports, personal loans and cosmetics as a way to ease the impact of the global crisis on jobs and income.
2015年1月29日 星期四
Dilemma faced by Brazil
Brazil’s economy is facing a dilemma between expansionary and contractionary fiscal policy.
On one hand, its GDP growth is sluggish, rising by just 6.7% in the previous four years. The outgoing government officials adopted expansionary fiscal policy by cutting interest rates and letting rip on public spending to drive up GPA(with components of government purchase and investment).
On the other hand, the inflation rate is as high as 6.4% and since the predecessor took office,Interest rate is increased to cut demand for borrowing and goods, attempting to slower rise in general price level. In addition,to save Brazil’s investment grade credit rating, the government promises a budget surplus, and this leads to either cutting in government spending or increase in tax revenue, GDP growth is discouraged when these contractionary fiscal policies are adopted.
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