Brazil's Economy Seen Shrinking After Industry Collapse(Case Study)

Overview
Brazil’s output tumbled 1.3 percent in March, its worst reading in six months, the national
statistics bureau reported Friday. In the 12 months through March, industrial production contracted
for the first time since 2017.
The Brazilian economy has suffered with a disappointing recovery since emerging from a
deep recession two years ago. Record-low interest rates haven’t provided the hoped-for boost to the
industrial sector, which since 2017 hasn’t once posted back-to-back months of growth. With the
government fiscally strapped, a wave of private-sector investment is needed to accelerate growth,
but confidence has wavered since President Jair Bolsonaro assumed power. Exports to Argentina are
also down as the neighboring country sinks into recession. Hypothetically, the country’s interest rate
and investment overtime is shown below
Quartic
x4 coefficient: -1.005656
3
x coefficient: 16.365994
2
x coefficient: -87.289987
100
x coefficient: 157.208973
90
y intercept: -4.713403
80 f(x) = − 1.00566 x⁴ + 16.366 x³ − 87.29 x²
2
70 + 157.209rx :− 4.7134 0.92964
R² = 0.929640481914291
degrees
60 of freedom: 11
P-value
50 of quartic: 2.80E-6
P-value
40 of increase
30
in r2: 0.000853
20
10
0
0 1 2 3 4 5 6 7 8

Cubic
x3 coefficient: 0.544138
x2 coefficient: -2.886933
x coefficient: -19.214122
y intercept: 114.311202
r2: 0.860914
degrees of freedom: 12
P-value of cubic: 0.00002
P-value of increase
in r2: 0.506939

Regression Model: y= -1.0057x4 = 16.366x3 - 87.29x2 + 157.21x - 4.7134

Analysis;
The Cubic and Quartic Regression model are similarly resemble each other, which
both p-value implies a statistical significant but Quartic has a higher R 2 equal to 93%
of the captured variable is predicted by interest rate. Thus, Quartic Regression is the
best model in predicting investment in Brazil.