History Blog 4

Rio de Janeiro Travel Blog

 › entry 2 of 2 › view all entries

            In the midst of the global economic crisis, Brazil’s economy is not exempt from a recession.  In fact, recent numbers show that Brazil recently entered an official recession.  However, Brazil’s economy is likely to bounce back much faster than any other developed country.

 

            Brazil has a number of things that will help the economy recover quickly.  Many people are investing money in the economy and hope to make a return on investment through diverse exports.  In order to expedite the economic recovery, Brazil’s President, Lula da Silva, is implementing new tax breaks.  The tax breaks were issued to various industries in order to stimulate spending within Brazil’s economy.

 

            However, President Lula agrees that cutting taxes is not a long-term solution for a stable economy.  According to the online article, President Lula hopes to distribute money to the lower class of Brazil through government welfare programs.  The Brazilian President thinks it is a more efficient way to boost the economy as opposed to cutting taxes.  The money dispersed directly to the poor will increase commerce and consumption within the country which is vital for economic growth.  Since government welfare programs go directly to the people for spending, it is more likely to immediately stimulate the economy through spending. 

 

Some Brazilian businessmen who benefit from the tax breaks do not lower the prices of their services and goods, therefore; the common consumers do not directly benefit from the tax breaks.  The excess money the business industry receives from the tax breaks are kept in banks which does not help stimulate the economy.  Thus, the government welfare programs are critical to enable the lower and working classes of Brazil to contribute to the spending and stimulation of the Brazilian economy.

Join TravBuddy to leave comments, meet new friends and share travel tips!

     The IMF is known to provide aid to many countries in need.  Regardless of intentions, the IMF gets rich from loaning money to major debt countries all around the world.  The most popular was Argentina.  The IMF provided billions of dollars in aid to help out their collapsing economy.  After the collapse of the Argentina government, the IMF was limiting spending in Argentina in order to payback the IMF.  This threw the economy into more turmoil.  Brother country, Brazil, also borrowed money, but the IMF was not controlling their economy.  It turns out that Brazil repaid the IMF and that kept the IMF away from economic decisions in the country.

     Brazil borrowed billions of dollars from the IMF but was able to repay the debt back.  Earth Times stated that Brazil is going to loan the IMF US$10 billion dollars.  The money will be used to help other developing countries.  Brazil is now one of the top 20 countries and is in a great position to be able to loan out that amount of money.  Brazilian Finance Minister Guido Mantega said that he is happy to aid other developing countries and is happy to see Brazil in the economic position to do so.  It was not long ago that Brazil was requesting funds from the IMF.  The IMF reported that it needs US$500 billion to aid countries.  China contributed US$50 billion dollars and Russia US$10 billion dollars.  Brazil is now among the top nations in the world in financial contributions to the IMF.

     It is interesting to see Brazil’s position in the world when they were struggling decades ago.  The fifty years of progress in five years can clearly be seen in the current economy. 

1,984 km (1,233 miles) traveled
Sponsored Links