Case Study Analysis: Brazil's Economic Growth and Challenges

This case study analyzes the economic situation of Brazil, focusing on its growth, challenges, and the impact of government policies. The analysis highlights the country's significant economic growth, driven by exports and foreign investment, while also addressing the challenges posed by currency appreciation and trade policies with China. The study explores the need for currency devaluation to boost exports and mitigate the negative impacts of trade imbalances. It discusses the potential consequences of such measures, including impacts on trade partners, inflation, debt repayment, and foreign investment. The analysis references academic sources to support its findings and provides a comprehensive overview of the economic landscape, offering insights into the complexities of managing economic growth and addressing trade-related issues. The case study concludes by emphasizing the importance of balancing economic strategies to ensure sustainable growth and stability.

Running head: CASE STUDY ANALYSIS
Case Study Analysis: Keeping Brazil’s Economy Hot
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1CASE STUDY ANALYSIS
Answer 1
Brazil holds the 5th position among the largest countries of the world. It is the largest
economy of the Latin America. The country has shown exceptional growth in the past decade.
The Brazilian government controls majority of the economy and more than 40% of the country’s
GDP constitutes the government expenditure. The government has taken the initiatives for
expanding the trade volume. The expansion in exports of products as well as natural resources
and huge level of investments by the foreign companies has contributed in the economic growth.
However, the government’s efforts can see a setback due to the trade policies with China. China
is the largest purchaser of Brazilian exports, although it does not purchase the amount that Brazil
exports to China. Another major issue is the appreciation of the real (Pacheco, Benini and
Mariani 2017). As the foreign companies are investing in the country, huge amount of money
has flowed into it, resulting in the rise in the value of the real. It has made the Brazilian exports
expensive and imports cheaper. Thus, the growth of exports has slowed down. The government
must take the measure for devaluing the currency and improving the trade balance with China to
keep the economy growing.

2CASE STUDY ANALYSIS
Answer 2
The government of Brazil needs to devalue its currency to increase the level of exports in
the international market. The government has imposed quotas and tariffs on many imported
products. The first major hit will be faced by the trade partners of Brazil, who exports major
products to Brazil. Hence, trade relations will experience a negative impact. Secondly, as the
level of import decreases, there will be more money in the economy that might lead to demand
pull inflation in the economy. Thirdly, due to the measures taken for devaluation, the people,
who have taken loans in the foreign currency, would face a sharp increase in the cost of
repayment of debts. Lastly, the quotas, tariffs and currency devaluation measures can scare off
the international investors, as they might perceive that the economy is hostile for business and
they might get less return on their investment. That would not be beneficial for the economy as
the level of international business and the inflow of foreign capital would decline and the growth
of the economy might be hampered (de Melo Modenesi, Luporini, and Pimentel 2017).

3CASE STUDY ANALYSIS
References
de Melo Modenesi, Andre, Viviane Luporini, and Débora Pimentel. "Asymmetric Exchange Rate
Pass-Through: Evidence, Inflation Dynamics and Policy Implications for Brazil (1999–2016)."
In The Brazilian Economy since the Great Financial Crisis of 2007/2008, pp. 69-99. Palgrave
Macmillan, Cham, 2017.
Pacheco, AP de C., E. G. Benini, and M. A. P. Mariani. "Creative Economy in Brazil:
opportunity of local tourism development in Mato Grosso do Sul's Pantanal." Estudios y
Perspectivas en Turismo 26, no. 3 (2017): 678-697.