Class 2

Question 1

What are the three different approaches Brazilian economy must be seen?

Answer 1

1. Productivity (low - microeconomic aspect)
2. Equality (unequal - political aspect)
3. Macroeconomics

Question 2

What are the important Macroeconomics indicators? (5)

Answer 2

• Current Account Balance
• Nominal Deficit (Budget Balance)
• Unemployment Rate
• Inflation
• Debt/GDP

Question 3

What does the International Market think about Brazil? (5+5)

Answer 3

They believe in Brazil! We have:

• Large international reserves, low external debt, a credible central bank, a resilient financial system, and exchange rate flexibility.
• Growth of 2.9% in 2023: robust private consumption, supported by a strong labor market and fiscal stimulus to social transfers and by a favorable external environment benefiting exports

Question 4

What is primary and nominal deficit? What’s the difference between them? How is BR currency?

Answer 4

These deficits measure the government’s fiscal performance

• Primary Deficit = Total Expenditures (excluding interest) − Total Revenues
• Nominal Deficit = Total Expenditures (including interest) − Total Revenues

BR’s currency (real) is the third-worst performing emerging market currency; Lula needs to eliminate the primary budget deficit and the model of fiscal is unsustainable without cost-cutting

Question 5

What is the biggest pressure on Public Finances?

Answer 5

Old retired people, particularly in health and pension funds, are projected to put pressure on public finances. (Biggest expense)