The case discusses the two-year economic recession (2015-2016) in Brazil which hit Latin America’s largest economy hard. Till 2010, Brazil was considered as Latin America’s gold standard for economic growth and social progress, with the economy being the world’s fifth largest. The economy started to contract in 2011 and entered into recession in 2014. The economic crisis and political corruption aggravated the situation in the country, leading to a sharp contraction of the economy in 2015-16. The case discusses the economic and political reasons that led to the crisis in Brazil. The deterioration in Brazil’s economic situation led to credit rating agencies downgrading the recession-hit nation’s sovereign debt status to ‘junk’ with a negative outlook. Despite political instability and degenerating economic conditions in the country, Brazilians remained optimistic that their economy would improve. Upon his assuming the office of President, Michael Temer vowed to pull Brazil out of recession and proposed some reforms to revive the economy. But like his predecessor who was suspended for financial irregularities, Temer’s alleged involvement in a corruption scandal raised public concern and his approval rating diminished significantly. Amid his growing unpopularity and widespread opposition by coalition allies, it would be difficult for Temer to pass the reforms needed to turn the Brazilian economy around, observers said. .

Economics Case Studies | Case Study in Management, Operations, Strategies, Business Environment, Case Studies

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Issues

The case is structured to achieve the following teaching objectives:

	Analyze the factors leading to a country’s economic slump
	Understand the effects of an economic crisis on the economy.
	Examine the macro-economic indicators of an economic crisis.
	Understand the reformatory measures necessary to turn around an economy.
	Study the challenges in implementing the measures to turn an economy around.

Contents

INTRODUCTION

BACKGROUND NOTE

BRAZIL’S ECONOMIC RECESSION

REASONS FOR ECONOMIC SLUMP

REPERCUSSIONS OF ECONOMIC CRISIS

CHALLENGE FOR TEMER

EXHIBITS

Keywords

Economic expansion,Commodity price cycle,Capital inflow,Fiscal balance,Economic recession,Fiscal deterioration,Inflation,Current account deficit,Budget deficit,Fiscal austerity measures,Political corruption,Global downturn in commodity prices,Junk status,Rising debt and debt-servicing costs,Sub-investment rating

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