Brazil controversies.According to Temer’s economic team, economy has

Brazil is Latin America’s largest country. It was one of the largest growing economies in the world and wasconsidered as the having the best growth potential by the investors. It is went through the worst and longlasting recession in 2014-2017. It is now emerging from the most dreaded recession in its economichistory. The recession started in the year 2014 following a political crisis which caused impeachment ofits president Dilma Rousseff, ,situation worsened during 2015 and 2016.Economic situation worsened thereafter causing a 7.5% contraction in real GDP between 2015 and2017.GDP contracted by 3.6% in 2016 following a contraction of 3.8% fall in 2015. This is the deepest fallon record of Brazilian economy . The intensity of inflation rose in last quarter of 2016.Investment fellsteeply by 10%in year 2016The per capita income fell by 9.2% in these years. Unemployment rateincreased from9.5% in year 2015 to 12.6% in January 2017.What led to the crisis?Lula government and Dilma government drastically increased the government expenditure where someinvestments were made for expansion and improvement of social programs while most of it was spendon bad investments used for corruption, propaganda and political play. To finance the governments extraexpenditure, the government printed a lot of money and contracted a lot of debts over the years while itstimulated easy credit for the people and business. There was no issue that the public faced through theyears 2005-2010, because of China’s increased purchasing of Brazilian exports which helped to keep theeconomy afloat and give public cheap credits.Due to decrease in exports of iron ore to China after 2008, there was a slow down in the economy of Brazilas well. The wages in private and public sector grew faster than the GDP, allowing consumers to borrowmore. This increased the inflation to 11%, central bank interest rate increased to 14.25% andunemployment touched almost 10%.RECOVERYThe Brazil economic crisis recovery phase is subject to many controversies.According to Temer’s economic team, economy has already reached its bottom and is ready for recoveryin the second quarter of 2017.The following economic policy measures led to the expectation of recovery: -• Decrease in actual inflation rate in compared to the targeted one.• Improvement in the economic climate due to adjustments in fiscal policies and also there hasbeen an injection of approximately 30 billion Brazilian reals in the economy.This optimistic view is however subject to many controversies. The reasons are listed below: -• Increasing unemployment rate reaching 13.2%by the end of February, 2017.• Sharp decline in gross investment coupled with decline in aggregate demand which resulted in anincrease in level of idle capacity reaching 26.7%• Industrial and construction sectors registered negative growth rates where electrical, energy, gasand sanitation are exception. As such many Brazilian Industries experienced a major decline in itsreal output after 2014• Also, the export growth did not contribute much in helping the economy for recovery mainlybecause the world economy was also experiencing slow growth rate .