The world’s economy had a big global economic downturn it has affected many developing countries like Brazil. However due to better economic fundamentals many developing countries have recovered much faster than most of developed countries. Brazil for instance had its GDP grown 1.9% between April-June 2009. In contrast, Italy had a huge fall in its GDP, mostly due to the fact that the recession hit Italy deeper than it did in Brazil. Although by analysing the chart, there is deep correlation between the two economies showing that developed and developing countries could be affected in the same way when world economy suffers recession or experience growth.
Most of developed countries due to the recession and huge deficits had to implement severe measures to cut budget expenses, raise taxes and face huge unemployment rates. However developing countries, like Brazil, due to better economic fundamentals and good commodities prices poured money into large-scale public infrastructure projects, cut taxes on important segments in its economies, like automobile industry, and passed tax breaks on companies and individuals. Those measures helped Brazil to keep up with GDP growth, low unemployment rates and controlled inflation rates.
Developed countries, such as Italy, were hit by a banking crisis and budget expenditures it has drained most of the resources available in the country resulting in large contraction in economy growth and consumption. Therefore the recession went deeper and is taking longer to turn over than the recession it has affected Brazil.
As the Italian government has been acting in controlling its expenditure, the banking sector has been bailed out and other sectors of the Italian economy are recovering as well, the country can expect a small positive growth for 2014. This growth however it will not be enough to reduce the magnitude of the youth unemployment rate still existing in Italy affecting the real potential growth of the...