How Does Brazil Maintain Developing Their Infrastructure Without Interfering With The Economic Economy?

How Does Brazil Maintain Developing Their Infrastructure Without Interfering With The Economic Economy?

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However, more goes into controlling inflation than just the interest rate. A big factor in Brazil’s inflation rate is their infrastructure. When domestic production grows, Brazil faces transportation issues which causes the offer to stagnate. Once it stagnates the demand grows and puts an upward pressure on prices and therefore increasing inflation. In order for Brazil to control their inflation there needs to be a significant and constant development in infrastructure. Infrastructure plays big role because Brazil is one of the largest countries in the world in terms of area and population. A higher population leads to higher demand for certain goods and puts a lot of pressure on the inflation rates and contributes to why inflation historically has been very high in Brazil. The question is, how can Brazil maintain developing their infrastructure without interfering with the economic sectors that when facing the slightest changes leads to inflation (Novais 1).
Despite Brazil experiencing some of the highest growth in GDP in the beginning of the 21st century, growth began to decline in 2011 and led to a recession. The terms of trade graph also exemplified the decline in growth since 2011. After arguably the best decade in Brazil’s history in terms of economic growth, Brazil could not maintain this level. Infrastructure plays a big role in this decline. As of 2013, Brazil ranked 114th out of 148 countries in terms of infrastructure. During a time where Brazil became one of the world’s top commodity export the one thing that held their economy back was their decrepit infrastructure. When Brazil’s inflation is outside of their target rate it can be related to their poor infrastructure causing a high demand. China’s biggest soya trader...

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...Brazil to be able to control their inflation rate more needs to be done aside from raising interest rates to some of the highest levels in the world. The main thing that keeps inflation out of the target range is infrastructure struggles leading to increased demand which causes prices to rise. A plan of austerity may not be the best way for Brazil to combat this issue due to a freeze in government spending when a lot of spending needs to happen to fix this issue of high demand for consumer goods and also for exports. The private sector also is at a disadvantage when fixing the infrastructure due to the harsh government and world regulations on their environment. In order for Brazil to have complete control of their inflation and to improve their economic growth, a lot needs to be done to make it easier for their consumers and trading partners to receive their goods.

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