Growth of financial market in Brazil stimulated mainly through developed markets of coffee,

Thanks to the huge capital inflows due to the huge sale of Petro Bras’ shares, the Brazilian real has been on a tear as of late. Yet, it is not just the recent equity

Today Brazil with a GDP of $2.533 trillion is the 7th largest economy in the world and it is also considered as one of the most successful emerging countries. Despite all predictions, thanks to its huge domestic market and agriculture, the country maintained its growth in 2009 and 2010.

On the strength of growth in public markets and efforts to make Brazil attractive to foreign investment, the country has become the second largest market for foreign direct investment just behind China. Brazil poises to become the 7th largest economy as soon as next year. Attention has been paid to many aspects of Brazil’s culture and has changed to fit into its new economic success.

As Brazil has a very large, diverse population, there is a huge potential, to grow the right business. As discussed previously, Brazil relies heavily on building strong personal relationships. Customers in Brazil are treated as friends and family. Lots of time and money need to be invested in creating and maintaining personal relationships.

According to (Douglas & Liu, 2011), Brazil’s business atmosphere benefits from open policies that embrace foreign direct investment (FDI), the government backing to infrastructure and innovative activities, and the advancing information and communication technology (ICT) industry. Brazil has an estimated population of over a two hundred and one million, earning it as the fifth most populous country in the world. Brazil’s most populated area is Sao Paolo followed by Minas Gerais and Rio de Janeiro. The labor force constitutes a hundred and five million people. The net migration rate stands at less than one per a thousand people. The birth rate and the death rate stands at 14.97 and 6.51 per

Brazil has always been a volatile economy, and quite a challenge for the Central Bank to manage. In the 90s, Brazil’s currency, heavily discredited due to a high inflation (which almost hit an annual rate of 7,000% in 1990) was anchored to the US dollar, to import credibility, aiming at stabilizing prices. This also indexed prices to the US dollar, causing inflation to rise whenever the US dollar rose. On top of that, Brazil has always had a savings glut which has traditionally been financed by foreign investors. As such, until 2003, whenever there was a global confidence crisis, investors would withdraw funds from Brazil, and the Central Bank would raise interest rates to convince investors to keep their money in Brazil. This dynamic created a vicious cycle, as higher interest rates would cause investments to be more expensive when risk aversion increased, contributing to the volatility of long-term investments in the Brazilian economy.

During the 2000s, the economy of Brazil had expanded rapidly because of its consumer boom and commodity exports, making the country the attraction of international markets. Nevertheless, the product growth, together with the rise of inflow of foreign capital, exerted upward pressure on the Brazilian Real. The government introduced capital controls in 2008 to prevent extreme inflow of foreign capital. Dilma Rousseff was elected to minimize the interest rates, increase investment in the country and improve productivity. In the first year of Rousseff presidency, the cost of labor in the country increased swiftly. The failure of increase in productivity growth resulted in the costs of unit labor being pushed upwards. The rise in the relative cost of production in the country led to greater incentive for enterprises to import products rather than purchasing them domestically. At the beginning of 2011, growth in industrial production weakened. In an attempt to improve the economy, the government introduced several stimulus packages to revive industrial production (The Economist,, 2012).

While researching text written on the effects of global financial crisis 2008-2009 on Brazil?s economy, I found some financial analysts that had published documentations in reference to the impact on the Brazilian economy. These authors discussed in research papers, financial journals, newspapers, pamphlets, and brochures on how Brazil?s state and local-owned banks, international banks and its government and monetary policies reactions to the global financial crisis 2008-2009. My goals in this paper, is to examine the impacts of the global financial crisis on the Brazil?s economy, and measures taken by government regulatory and banking policies that led to mitigating the impact of the global financial crisis of 2008-2009.

One of the reasons by Brazil’s economy is an important player in the world today is its size. They are the world’s fifth largest country by size and the ninth largest by nominal GDP. Other comparisons include the fact that they represent the largest economy in Latin America and second largest in the Americas. Because imports and exports are a significant component of Brazil’s GDP, at 27%, trade represents a key factor in Brazil’s economy ("Brazil Economy: Facts, Population, GDP, Inflation, Business, Trade, Corruption," n.d.). Although the government interference and a system that is characterized as inefficient and a challenge for market entry, Brazil continues to work toward an improving economic and social environment for its people. In

Third, domestic financial liberalization: was expected that the deregulation of the financial sector would help to increase savings and the availability of resources for investment. However, the opposite occurred, both savings and investment rates declined. The savings rate fell from 28% of GDP in the mid-eighties to around 20% in the mid-nineties and below 15% in 2001, while investment rates fell from an average of 22.2% of GDP in the eighties, to 18.2% in the nineties, and 16.1% in 2001-2006. The inflow of foreign capital may have replaced rather than enhanced domestic savings, financing consumption rather than investment. The decline of the investment rate helps to explain the dismal growth rates in Brazil: between 1994 and 1999, Brazil’s average annual real GDP growth rate was only 2.6% (3.2% between 1994 and 2008). On the other hand, the economy grew on average by 6.4% per annum between 1933 and 1980. (Filho)

In recent years, foreign banks accelerate their processes of globalisation, especially the entry in emerging market (J Cardenas, JP Graf & P O’Dogherty 2005), so does the Australian banks.

While researching written articles about the effects of global finance crisis 2008-2009 on Brazil’s economy, I found numerous financial researchers that had published documentations in reference to the impact on the Brazil economy. In addition, the banks and government interactions to the global finance crisis 2008-2009, particularly research papers, financial journals, newspapers, pamphlets, and brochures. The Brazil government policies deal with a less openness, and its emerging economy enabled the country finance regulators the ability to initiate moderate banking countering measures to the crisis. These actions taken by the Brazilian government minimized the long term impacts of the global finance crisis 2008-2009 compared to more developed nations. My goals in this paper, is to explore the Brazil banking finance reactions, and government regulation policies that led to mitigating the impact of the global financial crisis of 2008-2009.

A country with a small history of civil war and civil disorders, plenty natural resources and vast land area and that has millions of people eager to work. That’s Brazil’s intrinsic

1.16 Brazil’s currency is freely exchanged. Its most popular exchange rate is the Euro and its current exchange rate with the USD is 0.26690 (“BRL – Brazilian Real”).

Brazil is the world's ninth largest economy and has been in a recession since 2015 due to the drop in domestic consumption and a decline in investment. The 2016 Olympic games in Brazil did not boost growth as much as they expected. Brazil is the world's largest producer of coffee, sugar canes, and oranges as well as having an abundance of natural resources. The country faces difficult social problems and has one of the highest levels of inequality in the world. The unemployment rate is at 12.1% and has raised from 6.8% in 2014. The GDP per capita is at $10,309 which has increased from 8,727 in 2016. Last the general government gross debt is at 81.2% compared to 62.3% in 2014.