July 20, 2016 00:46 ET

Julio Cesar Díaz Witwicki -- Shares Concerns Over Brazilian Economic Climate

MEXICO CITY, MEXICO --(Marketwired - July 20, 2016) - In June, the Brazilian government announced that GDP shrank by 0.3 percent in the first quarter of this year, making it smaller by 5.4 percent than in 2015. According to Trading Economics, an online publication specializing in global economics research, Brazil's unemployment rate rose to 11.2 percent in the first quarter of 2016, an all-time high between 2012-2016, which saw an average of 7.65. "Brazil is experiencing a disastrous financial depression," says Julio César Díaz Witwicki, a business and investment expert specializing in Latin America. "Amid falling oil prices, which provides for the country's revenues, the budget deficit looms over $5.5 billion. In other words, Brazil has not suffered a recession this bad since the 1930s."

President Dilma Rousseff, successor to President Luiz Inacio Lula da Silva, is facing an impeachment trial after leaving the country in a state of economic peril. Lula da Silva's policies and programs set up Brazil for strong economic development and social progress. Under his leadership until he left office in 2011, poverty was reduced as the middle class expanded. Now the middle class is as vulnerable as ever, and Rousseff has been replaced by Vice President Michel Temer during the impeachment trials. According to Peter Hakim, the president emeritus and senior fellow of the Inter-American Dialogue, Lula failed to prepare for the leaner economic times, and Rousseff simply abandoned any fiscal restraint.

Julio César Díaz Witwicki notes that a survey published by the International Institute for Management Development, a top international business school in Switzerland, ranked Brazil last among 61 countries in the efficiency of its government, even below bankrupt Venezuela. Even still, many are instilling confidence in Temer to implement a tough economic plan for the country to climb out of the financial crisis. A new budget will be submitted to Congress no later than August 31, and among Temer's reforms include a constitutional amendment to allow a government spending freeze, including on education and health. Also on the table is the slashing of the country's unaffordable pension payouts, which have been criticized for being too generous.

A potential silver lining to the current crisis is that there are economic policies that can bring sustainable growth and social progress to Latin America, and might even act as a catalyst for implementing better reforms. Among improvements to consider are the labor laws and tax code, as well as some areas of the public sector that could be privatized.

Julio César Díaz Witwicki, an expert in Latin American financial markets, is founder and director of Simple Trading Corporation Limited, specializing in trading platforms for investors, brokers, and corporate institutions, allowing them to reliably access the global market. He is Chief Manager of Publicity and Marketing for PRODEP S.R.L. and its affiliated companies as well as acting advisor for many other financial firms. Witwicki values his philanthropic achievements as much as he does his business successes, and actively participates in outreach events of nonprofit organizations igniting the entrepreneurial spirit of underserved youth, including the DESEM Foundation for Young Entrepreneurs and Junior Achievement Worldwide.

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