Brazilian Economics

Economic Concern in South America: Brazil, Inflation Nation

By: Brenda Ward

AIU

Brazil is a country with much history. “Thousands of years ago Brazil was a colony of Portugal. On September 7, 1822 the country declared its independence from Portugal and became a constitutional monarchy, the Empire of Brazil. The country has seen dictatorship and the economic and social reforms that were clearly failing to address the economic problems of the country. The cost of living index, rather low in late 1950s began to rise sharply, and per capita GDP growth fell sharply, from 4.5% in 1957 to negative growth by 1963. By 1989 the government was battling hyper-inflation which at times reached rates of 25% per month. Brazil’s most severe problem today is arguably its highly unequal distribution of wealth and income. By the 19902 more than one out of four Brazilians continued to survive on less than one dollar a day. By 2006 President da Silva reduced poverty, unemployment and dependence on external resources.” (wikipedia.org).

“By January 2011 Brazil was experiencing the deadliest natural disaster in their history. The loss of crops has increased fruit and vegetable prices. Economists predict inflation will exceed 4.5 percent of the target in 2011. Consumer prices have jumped 5.91%.” (chron.com).

In addition to crops being lost highways, homes, farm animals and personal property was lost. Businesses that have been damaged will need to close to rebuild in these types of situations, adding unemployment to the rising inflation.

In reviewing the data sets the trend I see is that the government sets a maximum (benchmark) for the inflation rate but those are unrealistic in the current economy in Brazil.

“The inflation rate in Brazil was last reported at 6.5 percent in April of 2011. From 1980 until 2010, the average inflation rate in Brazil was 445.98 percent reaching an historical high of 6821.31 percent in April of 1990 and a record low of 1.65 percent in December of...