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Macroeconomics Question on Brazilian Tourism Industry

 
 
Reply Sun 16 Oct, 2016 04:39 pm
Foreigners' spending in Brazil has scarcely kept pace with inflation over the past five years, while Brazilians themselves have increasingly passed up domestic travel for trips to Miami and Lisbon … resulting in a tourism deficit of $15.6 billion last year

What does this imply for the current account deficit in Brazil? Second, what does this imply for net capital inflows / outflows?
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cicerone imposter
 
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Reply Sun 16 Oct, 2016 07:59 pm
@salhamed,
Those who earned income from the tourism industry lost $15.6 billion in revenue last year. The hotels, restaurants, bus, taxi, tourist sites, lost income. The workers got paid, but there was no revenue to support the tourism industry. The hotels were probably empty, but they still had to have the workers stay, and they got paid.
When there was no revenue to pay for all those working in the tourism industry, that means all the suppliers to the hotels and restaurants also lost business.
That's the reason any country that relies on just a few services and products in their economy such as tourism, it impacts them more dramatically.
Developed countries like the United States have many varieties of products and services that make up our economy, not just tourism.
When we had the 2008 recession, it impacted many people in our economy, but it was primarily a housing-banking-mortgage recession/crisis. The banks over-extended loans to people who should not have qualified for mortgage
loans. Look up "2008 crisis." You'll find out the reasons for that Great Recession.
The current account deficit is the amount of loans they incurred to stay in business. It usually means loans from other states (foreign countries).
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