The efforts of Brazil’s government to keep the economy growing will experience a rough ride. This is because the Brazilian real is appreciating day to day leading to an expensive cost of living to the Brazilians. It also has made it difficult for other nations to perform business activities with the Brazil due to an increased cost of products (Kremer, Bick & Nautz, 2013). The increased cost of products and services in Brazil is as a result of inflation whereby, there is a lot of money in the market. The inter-business relations between Brazil and other nations worldwide may have a great impact to the Brazil through the revenues it generates from selling their abundant natural resources to other countries. Since the products are very expensive in Brazil, the Brazilians may end up selling them to fewer countries that have the financial capability of purchasing them thus, less revenue.
Brazil might experience downsides by introducing quotas, tariffs and other measures to devalue their currency. A quota is a limit on a number of imported products. Tariffs, on the other hand, are the taxes to be charged on products and services being imported with the aim of improving the domestic market. Other measures may include; selling of securities to the general public by the central bank of Brazil. The aim of all these measures is to lower the amount of money that is flowing in the market. A quota may have various disadvantages to both the country and the general public in terms of revenue due to reduced exports and higher cost of living to the Brazilians. A tariff, on the other hand, raises the cost of doing business between Brazil and other countries which may lead to low-quality products. Finally, quotas and tariffs may lead to trade wars amongst countries globally.
Kremer, S., Bick, A., & Nautz, D. (2013). Inflation and growth: new evidence from a dynamic panel threshold analysis. Empirical Economics, 1-18.