need help in Economic as soon as possible
aa.csueb
1.docx1. Select two countries and track GDP, inflation, interest rates, exports and imports for each of the periods. Mexico & Brazil
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Mexico |
Crisis Lin |
2000-2009 Roy |
2010-2017 Bella |
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GDP |
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Inflation |
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Interest rates |
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Export |
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Import |
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Brazil |
Crisis Vicky |
2000-2009 Abdullah |
2010-2017 Jessica |
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GDP |
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Inflation |
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Interest rates |
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Export |
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Import |
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2. Create a table with the data, a short assessment of the economic environment, and a list of the top challenges facing global businesses trading with the countries.
Abdullah:
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Despite unprecedented levels of peace and global prosperity, in many countries a |
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mood of economic malaise has contributed to anti-establishment, populist politics |
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and a backlash against globalization. The weakness of the economic recovery |
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following the global financial crisis is part of this story, but boosting growth alone |
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would not remedy the deeper fractures in Brazil’s political economy. More fundamental |
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reforms to market capitalism may be needed to tackle, in particular, an apparent |
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lack of solidarity between those at the top of national income and wealth |
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distributions and those further down. |
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Mexico:
1980-1985 The Latin American debt crisis was a financial crisis that originated in the early 1980s (and for some countries starting in the 1970s), often known as the "lost decade", when Latin American countries reached a point where their foreign debt exceeded their earning power and they were not able to repay it. In August 1982, Mexico was the first of many Latin American countries to default on its sovereign debt.
2000-2009
2010-2017：
From 2010 to 2014, Mexico’s GDP continues to grow. However, GDP deceased since 2014 because of the drop in oil prices between 2014 and 2015. Mexico has felt the negative impact of the drop in oil prices, with the government cutting planned spending in 2015. Estimates are the one-third of Mexico's revenues come from petroleum, so that with oil prices going from $100/barrel in mid-2014 to $38/barrel in January 2015, GDP decreased to 1,046.90 Billion in 2016. Mexico was the United States' second largest trade partner both in export and import market. The export and import value keep increase from 2010. However, depressed Energy Prices Cause decline in U.S.-Mexico Trade from 2015. The tremendous drop in oil prices, which mean the same volume of trade worths much less than it used to be.
There has a significant decrease in inflation from 2014 to 2016, which indicated that Monetary policy has been successful at containing inflation. Mexico has contained inflation within its target band despite significant depreciation of the peso. The policy interest rate was raised 275 basis points since December 2015, to stem inflationary pressures resulting from the significant depreciation of the peso, and considering the relative monetary stance vis-à-vis the US Federal Reserve, and the output gap.
The economic environment has been complex. The country has been facing significant external headwinds with the collapse of oil prices in 2014/15, the significant depreciation of the peso, the tightening stance of the US Federal Reserve, increased volatility in financial markets, and the slowdown of the US economy.
Top challenges:
1. The renegotiation of NAFTA, which requires Mexico to develop a new way of engaging with the US government.
2. Mexican manufacturers compete head-to-head with China’s, despite Mexico’s strategic geographic advantage close to US markets, Chinese labor costs and production volumes are making it difficult for Mexico to preserve it share in US and global markets.
3. Mexico continues to be violence related to organized crime and corruption both in the government and with local police.
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Brazil:
1980-1985
The economy of Brazil is considered to be one of the largest in the world in terms of nominal GDP and purchasing power. The national economy of the country has always been relying on foreign import for supporting the economic growth in the long-term (Nayyar, 2010). However, during the debt crisis of the 1980s, Brazil, as well as many other Latin American countries, faced a considerable problem of an increased inflation rate (Reinhart & Rogoff, 2011). The high inflation rate impacted the economic environment not only in Brazil but also in China, the main trading partner of the country.
The main cause of the crises of the 1980s was the second oil crisis that occurred in 1979. The prices for imported oil were increasing at an unprecedented rate impaction the energy and economic security of many countries, including Brazil (Goldemberg, 2008). During 5 years, from 1980 to 1985 the inflation rate in Brazil increased from 95,62% to 242,23%. As a result of such a dramatic increase, the economy of the country was not able to maintain financial liquidity. Thus, the average income of the population was decreasing while the prices were rising. Brazil started to accelerate international trade with China. In 5 years export to China increased by more than 1000%, from 72,2 in 1980 to 818 in 1985. However, this led Brazil to the development of the public debt.
The modern economic environment of Brazil is favorable as it is supported by the high growth in China (Van den Berg, 2016). Moreover, the increased global demand for sugar, coffee, soy that Brazil produces helps to support the ongoing growth of the national economy (Sahota, 2009). The main challenge that global businesses face trading with Brazil and China is the instability of exchange rates. In order to protect the national economy, the central bank can raise rates dramatically impacting the stability of international business partners. Thus, the businesses trading with the countries should concentrate on risk evaluation.
2000-2009
2010-2017:
Brazil rebounded strongly from the global financial crisis of 2008 by around 2010 due to the boom in increased commodity prices as well as an increased labor force. However, these were unsustainable advantages to rely on as Brazil experienced a recession in 2014 which is reflected in the GDP decline in 2015 of approximately $652 million. The recession continued into 2016 as inflation remained around 10%. The hit of the 2014 recession can be seen in the increase in inflation and interest rates accompanied by a decrease in GDP, Exports, Imports and GDP Per Capita. Some of the main problems faced by Brazil’s economy would be the aging population, political turmoil and corruption issues. Besides these macroeconomic factors, Brazil has had a history of inward-oriented trade policies and as a result exports and imports only make up about a quarter of GDP. Brazil also has high trade barriers in the form of high tariffs that hurt both consumers and companies in Brazil and therefore Brazil reaps less benefits from integrating into the ever-growing global economy and creating global value chains outside of South America. Lowered trade barriers would allow for more competition, which would be good for consumers, but have a negative reaction from domestic producers. Exports have been slowly decreasing compared to Mexico and other emerging Asian economies as can be seen below. It seems that Brazil has yet to embrace the wave of globalization to integrate into the global economy and use more global value chains which has hurt them in terms of trade growth, compared to the other BRICs countries as well as other emerging economies. Brazil needs to work on fixing several factors in its economy from politics to labor productivity as well as try to lower trade barriers and join the global economy to use its commodity-heavy trade as an advantage.
3. Post your table and comments in this sakai assignment no later than Friday April 23 5:00 PM.
References:
Banco Central Do Brazil (2018). Interest Rates. Banco Central Do Brazil. Retrieved from
https://www.bcb.gov.br/Pec/Copom/Ingl/taxaSelic-i.asp
CEIC (2018). Brazil External Debt: % of GDP. CEIC. Retrieved from https://www.ceicdata.com/en/indicator/brazil/external-debt--of-nominal-gdp
CIA (2018). South America: Brazil. The World Factbook. Retrieved from
https://www.cia.gov/library/publications/the-world-factbook/geos/br.html
ECB (2016). What is driving Brazil’s economic downturn?. ECB Economic Bulletin, Issue 1. Retrieved from https://www.ecb.europa.eu/pub/pdf/other/eb201601_focus01.en.pdf?64a2cdbd9c4a9c254445668338164746
FRED Economic Data (2018). Gross Domestic Product for Brazil. St. Louis Fed. Retrieved from
https://fred.stlouisfed.org/series/MKTGDPBRA646NWDB#0
ITC (2018). Bilateral Trade between Brazil and China. Trade Map. Retrieved from
https://www.trademap.org/Bilateral_TS.aspx?nvpm=1|076||156||TOTAL|||2|1|1|2|2|1|1|1|1
Loman, H (2014). Brazil’s macro economy, past and present. RaboResearch - Economic Research. Retrieved from https://economics.rabobank.com/publications/2014/january/brazils-macro-economy-past-and-present/
OECD (2018). Brazil. OECD Economic Surveys. Retrieved from www.oecd.org/eco/surveys/economic-survey-brazil.htm
OECD (2014). Brazil. OECD Economic Surveys. Retrieved from www.oecd.org/eco/surveys/economic-survey-brazil.htm
Simoes, A (2018). Brazil. The Observatory of Economic Complexity. Retrieved from
https://atlas.media.mit.edu/en/profile/country/bra/
Statista (2018). Brazil: Import of goods from 2006 to 2016 (in billion U.S. dollars). Retrieved from https://www.statista.com/statistics/263645/import-of-goods-to-brazil/
The World Bank (2018). GDP per Capita (current US$), Brazil . The World Bank Group. Retrieved from https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?end=2016&locations=BR&start=2010
World Trade Organization (2018). Brazil . WTO Statistics Database. Retrieved from http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Language=E&Country=BR
WITS (2018). Brazil Exports compare with countries Mexico. World Bank. Retrieved from
Mexico
https://fred.stlouisfed.org/series/INTGSTMXM193N
https://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/mex/all/show/2016/
https://tradingeconomics.com/mexico/government-debt-to-gdp
https://countryeconomy.com/national-debt/mexico
https://tradingeconomics.com/mexico/gdp-per-capita
https://wits.worldbank.org/CountryProfile/en/Country/MEX/Year/2016/Summary
https://economics.rabobank.com/publications/2013/september/the-mexican-1982-debt-crisis/
https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_pcap_cd&hl=en&dl=en
https://en.wikipedia.org/wiki/Latin_American_debt_crisis
Brazil 1980-1985
Goldemberg, J. (2008). The Brazilian biofuels industry. Biotechnology for biofuels, 1(1), 6.
Nayyar, D. (2010). China, India, Brazil and South Africa in the world economy: Engines of growth?. Southern Engines of Global Growth, 1, 9-27.
Reinhart, C. M., & Rogoff, K. S. (2011). From financial crash to debt crisis. American Economic Review, 101(5), 1676-1706.
Sahota, A. (2009). The global market for organic food and drink. The world of organic agriculture. Statistics and emerging trends, 2009, 59-64.
Van den Berg, H. (2016). Economic growth and development. World Scientific Publishing Company.
