Economic crisis in Brazil (2014)

How did the economic crisis in Brazil happen? The economic crisis already showed signs that it would start from the global economic crisis that started us U.S in 2008.

Origin of Brazil's economic crisis (2014)

From the end of the 1990s until the beginning of 2012, Brazilian commodities, such as soybeans, iron ore and oil, were in increasing demand.

During the period of economic growth in the country, when it had a rate of 7.5% of the Gross Domestic Product (GDP), the Lula government began to encourage consumption.

During this period, the country's economy experienced a moment of stability and without inflation. The government developed cheap credit and subsidized interest rates for the business community chosen by the presidency.

the government became a major investor and carried out several public works

This policy allowed underprivileged social classes to begin to ascend socially and economically, acquiring products such as household appliances and automobiles. There was, then, an intense increase in demand on the part of society.

Savings and long-term investments were not encouraged.

When to 2008 world crisis arrived in Brazil, the then government sought ways to ensure that the internal market continued to meet the demand of the Brazilian population.

In 2010, the country recorded a 7.6% GDP growth rate. Tax exemptions for home appliances, automobiles and construction have contributed to the country's economic growth.

However, according to economist Ricardo Amorim, such incentives stimulated consumption rather than production.

Dilma government

In 2011, Dilma Rousseff assumes the position of president of Brazil and demonstrates that he does not have the same ability as his predecessor around his project.

Subsidized interest rates, cheap credit, businessmen allied with the government, and exoneration rates, currency devaluation and tax exemption that occurred in the Lula government were extended to the Dilma government.

However, the then government did not have the same political strength as its predecessor, as the former president's relations with favored businessmen did not expand until the Dilma government.

In addition, the corruption problems revealed by the Operation Lava Jato began to take on large proportions.

A political crisis affected the economy. Foreign investors did not feel safe investing in the country's companies. It was the beginning of the economic crisis.

In order to prevent inflation and avoid the crisis, the government froze public tariffs. During this period, the electricity sector broke the contract with the government and passed the costs on to the Brazilian people.

The recession started in 2014. Wages declined as did industrial production and GDP, which went to 3.8%

In 2015, Dilma presents several measures aimed at ending the crisis. One of them was the increase in taxes, such as the tax on credit, exchange and insurance operations in the real estate sector (IOF) and the tax on industrialized products (IPI).

Escaping from high taxes, several companies from the country in the textile and plastic sectors began to settle in Paraguay.

The president's popularity declined as did her inability to articulate political alliances. As a result, such crises in the political and economic scope culminated in the impeachment of Dilma Rousseff.

Learn more at:

• All about Operation Lava Jato
• All the presidents of Brazil and their most outstanding achievements