Economic analysis of Brazil and United States

ECONOMIC ANALYSIS OF BRAZIL AND UNITED STATES 6

Braziland the United States are the largest democracies and largesteconomies in western hemisphere because they share economicrelationship and important trade in the world. Brazil is emerging asthe economic powerhouse and global player due its economic growth.According to the World Bank report (2014), Brazil had the GrossDomestic Product of about $2.5 trillion making it to be sixth largesteconomy globally. The GDP of Brazil had increase by 2.4% in the year2013 due to international crisis and volatility of macroeconomicvariables of the country like interest and exchange rates. However,during the first quarter of 2012 the GDP had declined by 1.8% as aresult of industrial production. On the other hand, United Stateshad maintained their GDP of approximately $16.8 trillion because ofhigh productivity and infrastructure in 2013. The U.S is morecommitted in strengthening the bilateral economic relationship andmutual strengths with Brazil.

UnitedStates has tried to maintain the stability of its overall GDP rate ofgrowth, capita investment, high levels of research, and moderateunemployment opportunities. Moreover, the report indicated furtherdownturn in nonresidential and residential investments, local publicspending, deceleration in personal consumption, and inventory. Thereal GDP increased drastically during the third quarter in 2012 dueto nonresidential fixed spending, personal consumption expendituresand spending of the local government that helped in offsettingnegative contribution from inventory investment of private sector.During the third quarter the real personal consumption increased by1.8 % compared to an increase of 2.5% in the second quarter. Further,an increase of 7.8% of services and goods was witness during thethird quarter, which was lower than the increase of the secondquarter of 11.1% in the year 2014. The increase in consumption was asa result of economic growth that increased the income and generationof people. While in United States, the consumption had increased inthe year 2013 comprising 71% of US economy. The increase inconsumption rate was caused by attraction of immigration thatincreased the rate of immigration to the country.

Basedon the World Bank report (2014), Brazil rate of unemployment in theyear 2014 was about 4.9%. Since 2001 to 2014, the average rate ofunemployment was approximately 8.51%, and it increased to the highestincrease of 13.1% in August 2013. This percentage indicates thenumber of persons who actively look for job in the six Metropolitanareas. The rate of unemployment in Brazil has decrease in the lastyears due to increase in government investment and production. On theother hand, the rate of unemployment had decreased from 10% to 5.8%in the year 2014. Some of the factors that caused the rate todecrease were high rate of industrialization and governmentinvestment. The inflation rate of Brazilian decreased from 6.75% to6.59% in 2014 as a result of deceleration in consumer prices in threemonths.

Theworld records indicate that United State experienced the highest percapita in 2013 due to high productivity and well developedinfrastructure in the country. In addition, the income per employeeis high and highest average household (UnitedStates Nominal GDP,2014). On the other hand, during the same period of 2013, the percapita of Brazilian had declined as a result of unemployment and poorinfrastructure.

Basedon the macroeconomic theories, the economy of the United Statesincreased by 3.5 percent during the third quarter in the year 2014,indicating the slowing compared to a 4.6 percent during the previousperiod. The rates of inflation in the United States had declined to1.7% due to the value of their currency that is common and used amongmany nation. While in Brazil, the rate of inflation had increased toabout 2.3% in 2006 due to poor economy that resulted due to lowinvestment by the government. Therefore, the inflation rates ofUnited States are lower and better compared to those of Brazil, whichare higher. Therefore, the economy rating of United States has beenperforming poorly because of the business freedom, fiscal freedom,and deterioration in the rights of property. As a result of thesefactors, since 2006 the economy has witnessed drastic decline ofabout six points.

Brazil

Latest

Reference

Previous

Unit

GDP

2246

2013

2249

USD Billion

GDP Growth Rate

-0.6

Q1 2014

-0.2

percent

GDP per capita

5823

2013

5730

USD

Population

201

2013

199

Million

Unemployment rate

4.7

Oct 2014

4.9

Percent

United States

Latest

Reference

Previous

United

GDP

16800

2013

16245

USD Billion

GDP Growth rate

3.5

Q2 2014

4.6

percent

GDP per capita

45863

2013

45342

USD

Population

317.3

2013

315

Million

Unemployment

5.8

Oct 2014

5.9

percent

Conclusion

Basedon the information indicated in the table above, the economicperformance of United States has been performing poorly for the last10 years due to business freedom, fiscal freedom, and deteriorationin the rights of property. On the other hand, the economy of Brazilhas improved as a result of advancement in technology, highergovernment investment, and high production in private investments.

Reference

UnitedStates Nominal GDP (2014). International Monetary Fund.International Monetary

Fund.New York: General Learning Press.

WorldBank records (2014) &quotListof countries by GDP Nominal per capita&quot.International

MonetaryFund. International Monetary Fund. New York: General Learning Press.

WorldBank records (2014). Bureau of Economic Analysis. Bureau ofEconomic Analysis.

RetrievedJuly 30, 2014.