Blog # 2-Brazilian Officials Betray their Concerns

Just last week Brazilian officials decided to cut interest rates in order to end the countries’ seven month, “tightening cycle,” in order to promote gradual growth and an immediate corrosion of global markets within their country. Although unexpected the country now faces bigger concerns like slower global growth and falling commodity prices. The interest rate cuts have been predicted to affect Brazil by only one quarter of what the 2008 crisis did but these cuts have provided crucial predictions that they will have long term affects on making the global economy weaker.

This week Brazil’s President, Dilma Rouoseff, tried to encourage Brazilian citizens to continue to consume normally in an effort to defend the economy against this international crisis. According to the article the central bank said that during this global growth slow down this would create an opportunity to cut interest rates which in turn would lower exchange rate and reduce inflation. As of now inflation in Brazil is at its peak and doesn’t seem to be declining any time soon. With these reduced interest rates the central bank is planning for a growth within the Brazilian economy and the deterioration of global markets.

These changes are definitely having an affect internationally because global markets in Brazil will start to shut down and therefore not have the same financial stability as before. Citizens in Brazil will be rejuvenating their economy while other economies struggle with finances and the ability to improve their markets. Globalization is the underlying problem here and socially this has an effect on every economy that has chosen to be interlinked in this global expansion.

As I wrote in my first blog about the Syrian oil embargos you can see how one event in one economy has a domino effect on the rest of the world. Although it may seem small and insignificant it truly does have a connection with everything around us. Brazil’s choice to decrease their interest rates has socially effected how people in other countries such as Europe, Africa, and the United States spend their money and reside. With finances being less abundant in the different economies neither institutions nor individuals can prosper or create a better standard of living for themselves. Brazil has made its citizens spend a majority of their incomes within their economy making it harder to disperse that revenue into other markets and economies. In the long run this has a negative effect on the world and their spending which in turn affects the growth and overall global economy itself.

Link to Article: http://www.ft.com/intl/cms/s/0/bbd3633c-da3c-11e0-bc99-00144feabdc0.html#axzz1XOKihAOW