The centre-left PT (Worker’s Party) has been in power for over 12 years. President Dilma Rousseff (PT) was re-elected for a second mandate in October 2014, narrowly beating centre-right candidate Aecio Neves (PSDB) by 52% to 48%. President Dilma, as she is commonly referred to, has prioritised restoring economic growth, and improving education and infrastructure. Like her predecessor President Luiz Inácio Lula Silva, social programmes remain high on the agenda of the President. Building on Lula’s “Bolsa Família” programme (Family grant programme), President Dilma launched a new initiative with the aim of eradicating extreme poverty called ‘Brasil sem Miséria’ (Brazil without Poverty). These policies, combined with solid economic growth in the 2000s, added 40 million people to the ‘middle class’ since 2002. Big corruption scandals have made the government unpopular. One of President Dilma’s biggest challenges is the corruption scandal at national oil giant Petrobras. The scandal called “Lava-Jato” (car wash), has uncovered a bribery scheme involving large construction companies, Petrobras’ directors and many politicians, including some from the government coalition. The scandal represents an opportunity for Brazil to reduce corruption and its institutions are working independently to investigate and bring perpetrators to account. In the last decade Brazil has shown economic stability and was one of the first countries to recover from the 2008 global economic crisis. The country is a member of the Mercosul trading bloc, and is the biggest ILSC Business College BSBINT401 Assessment V1: 0615 Page 19 of 40

economy in South America, accounting for close to 50% of the continent’s GDP. Its attractiveness for foreign investors is justified by its solid economic fundamentals and its large consumer market. Brazil’s economy is the 7th largest in the world (GDP at PPP), roughly one tenth smaller than the German and Russian economies, and almost 30% larger than the UK or French economies. With a population of over 200 million, however, income per head in Brazil ranks 74th in the world. Over the past 10 years, more than 35 million Brazilians were lifted out of poverty. But income distribution remains highly unequal. Fiscal policy is also being tightened as the Government tries to convert a primary deficit in 2014 of 0.6% of GDP into a primary surplus of 1.1% of GDP in 2015. Benefit rules have been tightened, and fuel tax reintroduced. Adjustment is essential for Brazil to maintain its investment grade which is under some threat. Brazilian goods exports reached US$225 in 2014, in order of value, soy, ores, oil and fuel, transport materials, meats, chemicals, metallurgic products, sugar and ethanol. The top four purchasers of Brazilian exports were China 41%, the USA 27%, the EU 19% and Argentina 14%.