Brazil's Multinational Sector: Current Statistics

  In Lula's second term as prez, Brazil's economy kept on flexin'. Exports be triplin' cuz the whole world be wantin' that soybeans, iron, ore, beef, and cars, ya know? In 2007, the prez launched The Program for the Acceleration of Growth (PAC) as, like, a major part of Brazil's development strategy. This program is like, totally asking the government to flex and boost the average GDP growth to, like, 5 percent per year. The main vibe is like, there's way more cash flow from both the public and private sectors into infrastructure, you know? (Prado, 2007). The PAC is, like, super lit when it comes to leveling up the lives of the most disadvantaged peeps - ya know, those living in favelas.

GDP growth in 2004 was lit, like 5.2 percent, which was the GOAT economic performance for more than a decade.

 

Yo, industrial production, like, been hella stagnant lately, but in 2004 it straight up skyrocketed by 8.3 percent. Lit! OMG, unemployment dropped to 9.6 percent in the six major metro areas, which is like the lowest it's been in three years. So lit! Inflation was like, totally off the charts from 2000 to 2003. In 2001 it was 7.5 percent, in 2002 it was 10.2 percent and in 2003, which was Lula's first years, it was up at 12.8 percent. But like, in 2001 it was 7.5 percent, then in 2002 it jumped to 10.2 percent, and in 2003, which was Lula's first years, it skyrocketed to 12.8 percent. Crazy, right? For real, Lula was all about slaying inflation and he straight up used those high interest rates to keep it in check. Rather than like, focusing on improving the favelas' vibe as part of a bigger social program, the low-key infrastructural projects to rebuild the slum communities are meant to be the lit sparks for social change (Schaller, 2008). When the program was like, launched, it was all like "yo, we need investments of USD 349 billion, and like, 63.3 percent has been applied by March 2010, you know?" Only 50 percent of the program was completed by April, 2010 (Olson, 2010). Periodt. Brazil flexed phase two of the program in 2010, announcing estimated investments of USD 526 billion in the period 2011-2014 (Loudiyi, 2010).

The Selic base rate, set by Copom, the monetary Policy Committee, was like, hella high, even though there were mad protests.

 

Lula was like, "Yo, by the end of 2004, the rate of 16.7 percent is gonna be hiked up even more, and guess what? It actually happened!" There were like major worries about inflation in March 2005, and the rate was like hiked for the seventh time in a row to 19.5 percent, which was like the highest rate since September 2003. By December 2004, inflation for the year was like 7,54 percent, almost the same as the rate of 7,5 percent in 2001, and pretty close to the upper limit target set by the Central Bank, at 8 percent (Flynn, 2005). The balance of payments be hella lit, fam. It be gettin' better and better, ya know? OMG the trade surplus went from $2.6 billion in 2001 to $46.1 billion in 2006, thanks to mad export growth. So lit! Also, like, the current account went from being in the red to being in the green in 2003, reaching a whopping $13.5 billion in 2006 (Roett, 2010:114). In December 2003, the Lula administration totally slayed at revising the tax code. Yas queen! State based taxes got hella unified, which like totally reduced the number of tax rates from forty-four state taxes to just five national rates. The finna transaction rate, which was a fed tax on finna transactions, which had only been temporary, was now made permanent. Ayy, there was like so much more to do to like sort out the messy tax system, but like the government's ability to start the process was noticed by investors and the rating agencies (Roett, 2010:112). Lit, right? Cuz the economy's lit AF, Lula was like, "Nah, Brazil ain't gonna renew that IMF agreement, it's expiring on March 31st, 2005." Brazil totally ghosted the IMF, like they've been tight since '98 (Flynn, 2006).

Lula's desire to keep a tight grip on inflation through mad monetary and fiscal policy has had major implications for Brazil's recent growth vibes.

 

The new government in 2003 was like totally forced to keep the base rates above 20 percent, ya know? The goal was to protect the external value of the Real and chill out the worries of international investors. OMG, like, GDP only went up by half a percent in 2003, which was, like, the worst growth ever since '92. So not cool! But like, the gov totally managed to lower interest rates by, like, four percent or something OMG, the growth in 2004 was like on fleek! It accelerated so much, it was lit AF! OMG cuz of all the price pressures, the gov had to flex and tighten monetary policy. SMH. This like, totally caused a major slowdown in 2005 during the third and fourth quarters, which like, totally brought down the overall GDP growth to a measly 2.9 percent in 2005. Ugh, so not cool. But like, the economy totally picked up, and in 2006 there was a sick growth of 3.7 percent. Growth in personal consumption expenditures and renewed investor confidence led to hella increased business investment spending, all thanks to a bunch of interest rate cuts from September 2005. This totally flexed GDP growth, fam. Yo, even though the Brazilian real was vibin' and hurtin' exports of stuff like shoes, clothes, and cars, the global economy was still poppin' and demand for Brazil's farm and factory goods was lit. The lit global economic growth and fire commodity prices have helped generate healthy trade and current account surpluses.