Your SlideShare is downloading. ×
0
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Country risk analysis_brazil
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Country risk analysis_brazil

4,133

Published on

Country risk anaysis of Brazil

Country risk anaysis of Brazil

Published in: Business, Economy & Finance
0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
4,133
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
0
Comments
0
Likes
2
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Presenter’s Name – Partha Tripathi, Subodh Pandey, Bipin Chandra, Avik Sinha, Shantanu, Bibhu MohapatraMarch 2012 Country Risk Analysis Brazil
  • 2. Country Risk Analysis Report- BrazilTable of contentsCountry HistoryGeneral Domestic ScenarioFiscal policyMonetary policyForeign TradeStrengthWeaknessRisk Level and exposure limits
  • 3. Country Risk Analysis Report-Brazil-HistoryCountry HistoryBackground Following more than three centuries under Portuguese rule, Brazil gained its independence in 1822, maintaining a monarchical system of government until the abolition of slavery in 1888 and the subsequent proclamation of a republic by the military in 1889. Brazilian coffee exporters politically dominated the country until populist leader Getulio VARGAS rose to power in 1930. By far the largest and most populous country in South America, Brazil underwent more than half a century of populist and military government until 1985, when the military regime peacefully ceded power to civilian rulers. Brazil continues to pursue industrial and agricultural growth and development of its interior. Exploiting vast natural resources and a large labor pool, it is today South Americas leading economic power and a regional leader, one of the first in the area to begin an economic recovery. Highly unequal income distribution and crime remain pressing problems.Source: CIA report
  • 4. Country Risk Analysis Report-Brazil-HistoryCountry HistoryOverview Location: Eastern side of South America Bordering Atlantic Ocean Area: 8,511,965 Sq Km Boundary: Total land Border 14691 KM, bordering Argentina, Bolivia, Colombia, French Guiana, Guyana, Paraguay, Peru, Surinam, Uruguay, Venezuela. States 26 and one federal district Time Zone : UTC-3 hrs, Day light Saving applicable Population Growth Rate: 1.17% Language: Portuguese (official) Literacy : 90.3% Natural Resource: Bauxite, Iron ore, Gold, Manganese, Nickel, Phosphates, Platinum, tin, Petroleum, Hydro power, Timber Land Use: Arable land: 6.96%, Permanent Corps: 0.9%, Others 92.15% Natural Hazard: recurring drought in Northeast, floods and occasional frost in southSource: US government States Department
  • 5. Country Risk Analysis Report-Brazil-HistoryCountry HistoryGovernment Structure Official name: Federative Republic of Brazil Government Type: Federal Constitution :5 October 1988 Legal System: Based on Roman Codes has not accepted compulsory ICJ Jurisdiction but accepts ICCt jurisdiction Executive System – Head of government : President – Other Executive: Vice president, Cabinet appointed by President – Election: President and Vice President are elected on four year term by popular Votes Legislative System: Bicameral – National Congress: 81 seats – Chamber of Deputies : 513 seats Judicial System: – Supreme Federal Tribunal – Higher Tribunal of Justice – Regional federal TribunalSource: Brazilian Government
  • 6. Country Risk Analysis Report-Brazil-HistoryCountry HistoryPolitical Structure Present president Dilma Rousseff is from Workers party and Vice president Micel Temer is from Brazillian Democratic Movement party Major Party and Ideology leaning Name of Party Abbreviation Leaning Workers Party PT Center –Left Democrats DEM Center-Right Brazilian Democratic Movement Party PMDB Center Brazilian Social Democratic Party PSDB Center Green Party PV Center-Left Socialism and Freedom Party PSOL Left Brazilian Labor Party PTB Center Right Brazilian Socialist Party PSB Center-Left Democratic Labor Party PDT Center-Left Communist Party of Brazil PCdoB Left Progressive Party PP Center-RightSource: US Government Department of States
  • 7. Country Risk Analysis Report-Brazil-HistoryCountry HistorySocial Structure and Key Indicators Major ethnic groups: white 53.7%, Brown 38.5%, Black 6.2% (2000 census) Religion: Roman Catholic 73.6%, Protestant 15.4% (2000 census) Age Structure: less than 14 year 26.2%, 15-64 year 67%, 65 year and above 6.7% (2011) Median age: Total 29.3 years, male 28.5 years and female 30.1 years (2011 est) Urbanization: urban population 87% (2010), urbanization rate 1.1% (2010-15 est) Sex Ratio: 0.98 males per female (2012) Maternal Mortality rate: 58 deaths per 100,000 live birth (2008 data) Infant Mortality: 20.5 per 1000 live birth (2012 est) Health Expenditure : 9% of GDP Unemployment: 17.8% (2009), 5.9% (2010) HDI : 0.718, category High (84th Rank ) (source UNDP 2011) Gini coefficient (53.9) 2009 (source world bank)Source: CIA report except HDI and Gini coeffecient
  • 8. Country Risk Analysis Report- BrazilTable of contentsCountry HistoryGeneral Domestic ScenarioFiscal policyMonetary policyForeign TradeStrengthWeaknessRisk Level and exposure limits
  • 9. Country Risk Analysis Report-Brazil-Domestic ScenarioGeneral Domestic Scenario GDP ( Price 2000 in USD): 916,131,427,896 USD (2010) GDP Growth rate : 7.5% however it had a negative growth in 2009 however 5 year average is 4.7% GDP per capita ( Price 2000 in USD) : 4699.4 USD average 5 year growth rate 3.6% Gini Index : 56.4 (2005) Unemployment rate : 6.7% (2010) Internal Savings/GDP ratio : 17% (2010) Investment to GDP ratio : 19% (2010) Gross Domestic Savings/Gross Domestic Fixed Investment : 94% (2010)Source: World bank data
  • 10. Country Risk Analysis Report- BrazilTable of contentsCountry HistoryGeneral Domestic ScenarioFiscal policyMonetary policyForeign TradeStrengthWeaknessRisk Level and exposure limits
  • 11. Country Risk Analysis Report-Brazil-Fiscal PolicyFiscal Policy Budget Deficit/GDP ratio : (2.9%) (2010) Internal Debt/GDP ratio : 61% (2010) Fiscal Surplus/GDP ratio: 2.1% (2010)World Bank Data
  • 12. Country Risk Analysis Report- BrazilTable of contentsCountry HistoryGeneral Domestic ScenarioFiscal policyMonetary policyForeign TradeStrengthWeaknessRisk Level and exposure limits
  • 13. Country Risk Analysis Report-Brazil-Monetary PolicyMonetary Policy Inflation rate (consumer price): 5% GDP Deflator: 7.3% Broad Money Supply Growth (M3): 15.4% Real Rate of Interest rate : 30.4% Benchmark Interest Rate: 9.75% on Jan 2012 with historical high of 45% in March1999Source: World Bank Data for the year 2010
  • 14. Country Risk Analysis Report- BrazilTable of contentsCountry HistoryGeneral Domestic ScenarioFiscal policyMonetary policyForeign TradeStrengthWeaknessRisk Level and exposure limits
  • 15. Country Risk Analysis Report-Brazil-Foreign TradeForeign Trade Growth rate of Exports :16.83 Billion USD(2010), 21.34 Billion USD(2011), 26.8% Growth Growth rate of imports :15.15 Billion USD (2010), 18.85 Billion USD (2011), 24.4% Growth Current Account balance: -24.302 Billion USD (2009), -47.365 Billion (2010), Necessary imports: Oil, Power, machinery, electrical and transport equipment, chemical products Export/Import ratio : 1.11 (2010), 1.132 (2011) Trade/GDP: 34.9% Current account/GDP ratio : -2.21% International Reserves: 565.639 Million USD on 31st Dec 2011 (International Reserves-Gold)/Imports : 3% (2011) External Debt/GDP ratio 44.75% (2011) Short term debt/Reserves (minus gold) 3.94% External Debt Services/Exports 2.68(2011) Capital Inflows: Total 65.279 Billion USD, FDI 48.437 Billion USD Exchange currency rate 1.602 USD/ BRLSource: OECD database
  • 16. Country Risk Analysis Report- BrazilTable of contentsCountry HistoryGeneral Domestic ScenarioFiscal policyMonetary policyForeign TradeStrengthWeaknessRisk Level and exposure limits
  • 17. Country Risk Analysis Report-Brazil-StrengthStrength Strength Factors Possible Repercussions Abundant Natural resources  High Political Stability Fiscal and Monetary policy has been  Less Social demands prudent  Enough Supply of labour force Young Population  Educated labour force High FDI  Opportunity for Private profits Domestic market potential with low labour cost reduction in Gini Index High HDI Healthcare and sanitation well reached Low Internal debt High Literacy level
  • 18. Country Risk Analysis Report- BrazilTable of contentsCountry HistoryGeneral Domestic ScenarioFiscal policyMonetary policyForeign TradeStrengthWeaknessRisk Level and exposure limits
  • 19. Country Risk Analysis Report-Brazil-Weakness Weakness Weakness Factors Possible Repercussions Too high foreign currency inflow causing  Export reduction currency appreciation  Rise in spreads High Money supply growth rate Real interest rate is still very but reduced over  Higher compliance cost for private period of time business High Tax complexities  Higher inflation
  • 20. Country Risk Analysis Report- BrazilTable of contentsCountry HistoryGeneral Domestic ScenarioFiscal policyMonetary policyForeign TradeStrengthWeaknessRisk Level and exposure limits
  • 21. Country Risk Analysis Report-Brazil-Risk Level and Exposure LimitsRisk Level and Exposure Limits Political and Social stability Economic growth Prospects Domestic Financial stability External competitiveness Debt Servicing Capacity BOP Sustainability
  • 22. Country Risk Analysis Report-Brazil-Risk Level and Exposure LimitsRisk Level and Exposure Limits Political and Social stability Brazil is Federal Republic comprising of 26 states and Federal District. Executive, Legislative and Judiciary are the three main bodies of functionary in the country. There is demarcation of activities of these three bodies. There is also checks and balances amongst each other. The Government head is elected by people and now the trends are of coalition politics where many parties come together to form government. This has resulted in stable Democratic system. Brazil society is mainly composed of two major ethnic groups, Government spends about 9% of GDP in health care and sanitation. Unemployment has reduced. This has resulted in higher Human development Index and lower GINI Index. Male female ratio is healthy.
  • 23. Country Risk Analysis Report-Brazil-Risk Level and Exposure LimitsRisk Level and Exposure Limits Economic growth Prospects Brazil economy is growing economy. GDP is growing at a high rate of 7.5% over year 2009, however it had experienced a dip in GDP growth in the year 2009. Long term average GDP growth rate is 4.7%. Service sector has maximum share of GDP followed by Manufacturing. GDP per capita has increased by 3.5%. Gross Savings has increased to 17% of GDP and Investment is 19% of GDP. Thus Investment in Economy is mainly fueled by Internal savings. Inflation is moderate. FDI is also very high causing currency appreciation. It has introduced tax on FDI to restrict the inflow. Thus Brazil has high and stable economic growth prospect.
  • 24. Country Risk Analysis Report-Brazil-Risk Level and Exposure LimitsRisk Level and Exposure Limits Domestic Financial stability Brazil has fiscal surplus of 2.19% of GDP. This is cause of worry as Brazil is not able to fully realize Growth Prospects. The total debt is 16.6% of GDP and has a reducing trend. Debt servicing as percentage of exports is 19% which is relatively lower. There is negative risk assessment of higher interest rate. In the Overall assessment Domestic Financial condition is quite stable. But has a downside risk lower expenditure as compared to receipts.
  • 25. Country Risk Analysis Report-Brazil-Risk Level and Exposure LimitsRisk Level and Exposure Limits External competitiveness The Brazilian economy is export oriented. There is huge inflow of FDI and portfolio investment due better investment climate. This causing Brazilian Currency to appreciate against US dollars from 0.63 BRL/USD to 0.550. Currency appreciation will reduce Export competitiveness of Brazil. Brazil has high FDI flow thus to restrict FDI flow Brazil has introduced 2% tax on FDI. This will restrict FDI flow. This may help restrict Brazilian currency appreciation.
  • 26. Country Risk Analysis Report-Brazil-Risk Level and Exposure LimitsRisk Level and Exposure Limits Debt Servicing Capacity External debt is 44.5% of GDP. External Debt servicing requirement is low with obligation at 19% of Exports. Brazil has High reserves. Due to currency getting appreciated and high growth of exports Brazil has low risk of Debt not being serviced.
  • 27. Country Risk Analysis Report-Brazil-Risk Level and Exposure LimitsRisk Level and Exposure Limits BOP Sustainability Export is growing at the rate of 26.8% and import at the rate of 24.4%. Currently export is more than imports with export import ratio of 1.132. The Balance of Payment is sustainable with export growing more than imports. There is less risk of BOP not being sustainable.
  • 28. Please contact at pt.partha.tripathi@gmail.com for further for further information

×