Brazil Pestle Analysis

Brazil' is' a' federal' democratic' republic,' under' the' current' presidency' of' Dilma' Rousseff.' Whilst' other' economies' have' faltered' since' the' financial' crisis,' Brazil' is' known' as' one' of' four' major' developing' economies' (BRIC)' which' has' led' it' to' become' the' 6th' largest' economy' in' the' world.' However,' in' recent' years,' challenges' with' controlling' macroeconomic' objectives' and' the' distribution' of' a' growing' GDP' have' changed' the' landscape' of' the' Brazilian' economy.' This' report' aims' to' give' a' country' analysis' of' Brazil,' using' the' PESTLE' framework,' before' considering' industries'with'positive'investment'outlooks'to'design'a'single'country'fund.'

Political' Rousseff’s' government' has' been' under' heavy' criticism' domestically' due' to' their' prioritising' of' government' spending' on' infrastructure' solely' for' the' upcoming'World'Cup'and'Olympics,'at'the'expense'of' public' services' for' the' growing' middle' class' (Lewis,' J.' &'Kiernan,'P.'2013).'The'lack'of'general'infrastructure' investment' is' shown' comparatively' in' Figure' 1.' If' public' pressures' were' to' continue,' it' would' be' inevitable' that' spending' on' public' services' would' increase'in'the'future.' Whilst' eradicating' corruption' has' been' a' target' for' Brazil' in' recent' years,' many' academics' including' Kurczy'(2013)'argue'that'corruption'has'not'improved' due'to'a'lack'of'implementation'of'policies,'thus'complicating'the'business'environment.'Brazil'has' played' a' major' part' in' the' development' of' Mercosur' and' Unasul,' earning' international' credibility' and'increased'regional'trade.'(Sennes'et'al'2006).

Economic' According' to' the' IMF’s' world' economic' outlook' Brazil’s' economy' is' the' 6th' largest' in' the' world,' with' a' GDP' of' US$' 2.5' trillion' that' is' expected' to' grow' by' up' to' 4%' annually' until' 2016' (MarketLine).' It' is' the' largest' economy' in' Latin' America,' contributing' 38.5%' to' the' region’s' GDP' (Euromonitor'2012).'

Unemployment'in'Latin'America'is'estimated'at'6.5%'for'2012'(Worldbank),'and'is'5.66%'in'Brazil' (MarketLine),' with' Inflation' at' 4.1%' and' 5.28%.' Hand' in' hand' with' the' growing' GDP' of' Brazil' comes' an' ever_increasing' middle' class' that' demands' goods' and' services,' such' as' in' retail' or' education.'This'growth'in'consumer'spending'(Figure'2)'has'led'to'heavy'inflationary'pressures'on' Brazil’s'government.' The'recent'rise'in'banks’'willingness'to'lend'has'resulted'in'large'household'debts,'reported'to'be' 43%' in' 2012' (MarketLine).' This' has' led' to' dramatic' asset' price' increases,' with' concerns' over' a' housing' price' bubble' diminishing' real' estate' stock' prices,' shown' in' Figure' 3'