Economy of Brazil and Russia Essay Example | Topics and Well Written Essays - 2000 words

Economy of Brazil and Russia - Essay Example This paper is divided into two sections which look at Russia and Brazil individually. The main goal of this report is to answer two questions. First, whether the Russian and Brazilian governments have been successful in running their economies from 2003-2005. Secondly, it will conduct an identification and evaluation of the different policies implemented by both governments within the time frame and their effects on the overall economic performance. According to the United State's Center Intelligence Agency World Factbook, Brazil is the ninth largest economy in the world based on purchasing power parity. Recovering from its inflationary problem in the early 1990s, Brazil has now emerged as a stable economy owing from the Real Plan implemented since 1994 (Economy of Brazil 2006). In order to fully assess the economic performance of Brazil during the past three years, this paper will look at various economic indicators which include nominal GDP (Gross Domestic Product), GDP growth rate, per capita GDP, and inflation growth from 2003-2005. This paper will utilize the data provided by the International Monetary Fund (IMF). Figure 1 shows the GDP and GDP growth rate in Brazil from 2003-2005. ... All in all, the Brazilian economy recorded a 7.32% increase in GDP during the three year period. It should be noted that nominal GDP is in an upward trend, albeit at a decreasing rate. Figure 2. GDP per capita (Real) and Inflation (%) in Brazil (2003-2005) Figure 2 shows the GDPO per capita and inflation rate of Brazil in from 2003-2005. Consistent with the upward trend in nominal GDP, per capita GDP is also increasing at a decreasing rate. There is a huge drop in the growth of inflation rate from 2004-2005. However, the economy was not able to sustain the 2004 level. Inflation slightly mounted by 0.3% in 2005 relative to what is recorded in the previous year. Compared to the previous years, the Brazilian government has been highly successful in fostering economic growth. World Bank reports that the country "has succeeded in reducing poverty to some extent and stepping towards attaining the millennium goals" and "for the first time in three decades, Brazil is experiencing an internal and fiscal equilibrium and low inflation." These improvements has been directly attributed to the government's active role in alleviating the economic situation. The Organization for Economic Co-operation and Development (OECD) stresses that the development of the Brazilian economy in the past three years is a result of its notable macroeconomic policies including the inflation targeting model and the Fiscal Policy legislation. Economists refer to these policies as the "main institutional pillars for macroeconomic management and consolidation" (Economic Summary of Brazil 2005) in Brazil. The inflation targeting framework has been adopted by Brazil in 1999 after putting in place a floating exchange rate regime. This requires the