Brazil’s government’s attempts to keep the economy expanding will face a tough ride. This is because the cost of living in Brazil is on the rise. It has also made it impossible for other nations to carry out trading operations with Brazil due to higher import costs (Kremer, Bick & Nautz, 2013). The high cost of goods and services in Brazil is due to inflation, which means that there is a lot of money on the economy. Inter-business ties between Brazil and other nations around the world can have a significant effect on Brazil through the profits it produces from the sale of its rich 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, getting less revenue.
Brazil might experience downsides by introducing quotas, tariffs and other measures to devalue their currency. A quota is a limit on some 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. All these measures aim 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 regarding 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.