Economic overview Brazil, in 36 editions.

The economy, with large agrarian, mining, and manufacturing sectors, entered
the 1990s with declining real growth, runaway inflation, an unserviceable
foreign debt of $122 billion, and a lack of policy direction. In addition,
the economy remained highly regulated, inward-looking, and protected by
substantial trade and investment barriers. Ownership of major industrial and
mining facilities is divided among private interests--including interests - including several multinationals--and
multinationals - and the government. Most large agricultural holdings are
private, with the government channeling financing to this sector. Conflicts
between large landholders and landless peasants have produced intermittent
violence. The government is seeking an IMF standby loan despite several failed agreements over the past decade. Relations with foreign commercial banks remain strained because of mounting interest arrears on Brazil's long-term debt. The Collor government, which assumed office in March 1990, is
embarked on an ambitious reform program that seeks to modernize and
reinvigorate the economy by stabilizing prices, deregulating the economy,
and opening it to increased foreign competition. The government in December
1991 signed a letter of intent with the IMF for a 20-month standby loan.
Having reached an agreement on the repayment of interest arrears accumulated
during 1989 and 1990, Brazilian officials and commercial bankers are engaged
in talks on the reduction of medium- and long-term debt and debt service
payments and on the elimination of remaining interest arrears. A major
long-run strength is Brazil's vast natural resources.

The economy, with large agrarian, mining, and manufacturing sectors, entered
the 1990s with declining real growth, runaway inflation, an unserviceable
foreign debt of $122 billion, and a lack of policy direction. In addition,
the economy remained highly regulated, inward-looking, and protected by
substantial trade and investment barriers. Ownership of major industrial and
mining facilities is divided among private interests - including several
multinationals - and the government. Most large agricultural holdings are
private, with the government channeling financing to this sector. Conflicts
between large landholders and landless peasants have produced intermittent
violence. The Collor COLLOR government, which assumed office in March 1990, is
embarked on launched an ambitious reform program that seeks sought to modernize and
reinvigorate the economy by stabilizing prices, deregulating the economy,
and opening it to increased foreign competition. The government in December also
1991 signed a letter of intent with the obtained an IMF for a 20-month standby loan.
Having loan in January 1992 and reached an agreement agreements with
commercial bankers on the repayment of interest arrears accumulated
during 1989 and 1990, Brazilian officials and commercial bankers are engaged
in talks on the reduction
of medium- and long-term debt and debt service payments. Galloping inflation - the rate doubled in
payments and on 1992 - continues to undermine economic stability. Itamar FRANCO, who assumed
the elimination presidency following President COLLOR'S resignation in December 1992,
has promised to support the basic premises of remaining interest arrears. A major COLLOR'S reform program but
long-run strength is has yet to define clearly his economic policies. Brazil's vast natural resources. resources
remain a major, long-term economic strength.

The economy, with large agrarian, mining, and manufacturing sectors, entered
entered the 1990s with declining real growth, runaway inflation, an unserviceable
unserviceable foreign debt of $122 billion, and a lack of policy
direction. In addition,
the economy remained highly regulated,
inward-looking, and protected by
substantial trade and investment
barriers. Ownership of major industrial and
mining facilities is
divided among private interests - including several
multinationals -
and the government. Most large agricultural holdings are
private, with
the government channeling financing to this sector. Conflicts
between
large landholders and landless peasants have produced intermittent
violence. The COLLOR government, which assumed office in March 1990,
launched an ambitious reform program that sought to modernize and
reinvigorate the economy by stabilizing prices, deregulating the economy,
economy, and opening it to increased foreign competition. The
government also
obtained an IMF standby loan in January 1992 and
reached agreements with
commercial bankers on the repayment of
interest arrears and on the reduction
of debt and debt service
payments. Galloping inflation - the (the rate doubled in
1992 - and by March
1994 had risen to 42% per month) continues to undermine economic
stability. Itamar FRANCO, who assumed
the presidency following
President COLLOR'S resignation in December 1992,
has promised to support the basic premises was out of step with
COLLOR'S reform program but
has yet agenda; initiatives to define clearly his economic policies. redress fiscal problems,
privatize state enterprises, and liberalize trade and investment
policies have lost momentum. Brazil's natural resources
remain a
major, long-term economic strength. strength

The economy, with large agrarian, mining, and manufacturing sectors,
sectors, entered the 1990s with declining real growth, runaway
inflation, an
unserviceable foreign debt of $122 billion, and a lack
of policy
direction. In addition, the economy remained highly regulated,
regulated, inward-looking, and protected by substantial trade and investment
investment barriers. Ownership of major industrial and mining
facilities is
divided among private interests - including several
multinationals -
and the government. Most large agricultural holdings
are private, with
the government channeling financing to this sector.
Conflicts between
large landholders and landless peasants have
produced intermittent
violence. The COLLOR government, which assumed
office in March 1990,
launched an ambitious reform program that sought
to modernize and
reinvigorate the economy by stabilizing prices,
deregulating the
economy, and opening it to increased foreign competition. The
government also obtained an IMF standby loan in January 1992 and
reached agreements with commercial bankers on the repayment of
interest arrears and on the reduction of debt and debt service
payments. Galloping inflation (the rate doubled in 1992 and by March
1994 had risen to 42% per month) continues to undermine economic
stability. competition. Itamar FRANCO, who assumed the presidency following
President COLLOR'S COLLOR's resignation in December 1992, was out of step with
COLLOR'S COLLOR's reform agenda; initiatives to redress fiscal problems,
privatize state enterprises, and liberalize trade and investment
policies have lost momentum. Galloping inflation - by June 1994 the monthly
rate had risen to nearly 50% - had undermined economic stability. In
response, the then finance minister, Fernando Henrique CARDOSO,
launched the third phase of his stabilization plan, known as Plano
Real, that called for a new currency, the real, which was introduced
on 1 July 1994. Inflation subsequently dropped to under 3% per month
through the end of 1994. The newly elected President CARDOSO has
called for the implementation of sweeping market-oriented reform,
including public sector and fiscal reform, privatization,
deregulation, and elimination of barriers to increased foreign
investment. Brazil's natural resources remain a
major, long-term
economic strength strength.

With its Possessing large and well-developed agricultural,
mining, manufacturing, and service sectors, Brazil has South Brazil's economy outweighs
America's largest GDP by far that of all other South American countries and has the potential to become a major is expanding its
player presence in the world economy. markets. Prior to the institution of a
stabilization
plan - the Plano Real (Real Plan) - in mid-1994, stratospheric
inflation rates had
devastated the economy disrupted economic activity and discouraged
foreign investment. Since
then, tight monetary policy has apparently brought
inflation under
control - consumer prices increased by 23% only 10% in 1995
1996 compared to more
than 1,000% in 1994. At the same time, GDP
growth slowed from 5.7%
in 1994 to 4.2% as credit was tightened and the 2.9% in 1996 due to tighter credit.
The steadily appreciating real
currency has also encouraged imports while depressing imports,
contributing to a growing trade deficit, and depressed export growth. The increased
stability of the Brazilian Brazil's more stable economy allowed it to weather the fallout in 1995
from the Mexican peso crisis relatively well, with foreign funds
flowing in during the second half and record levels of 1995
foreign investment have since flowed in, helping to swell official foreign
foreign exchange reserves past the $50 to $60 billion mark. Stock market indices in 1996; stock markets
Sao Paulo and Rio de Janeiro, however, ended 26% lower reflected this increased investor confidence, gaining 53% in 1995. dollar
terms. President CARDOSO remains committed to further reducing
inflation in 1997 and putting Brazil on track for expanded economic
1996 while boosting growth, but he faces several key challenges. Servicing Fiscal reforms requiring
constitutional amendments are stalled in the Brazilian legislature; in
their absence, the government is continuing to run deficits and has
limited room to relax its interest and exchange rate policies much if
it wants to keep inflation under control. High interest rates have
made servicing domestic debt has become dramatically more burdensome for both
public and private sector entities because of very high real
interest rates which are entities, contributing to growing budget deficits federal and state
budget problems and a surge in bankruptcies. Fiscal reforms, many of which require
constitutional amendments, are proceeding at a slow pace through the
Brazilian legislature; in their absence, the government is
maintaining its strict monetary policy. Brazil's natural resources
remain a major, long-run economic strength.

Possessing large and well-developed agricultural,
mining, manufacturing, and service sectors, Brazil's economy outweighs
that of all other South American countries and is expanding its
presence in world markets. Prior to the institution of a stabilization
plan - the plan-the Plano Real (Real Plan) - in mid-1994, stratospheric
inflation
rates had disrupted economic activity and discouraged
foreign
investment. Since then, tight monetary policy has brought
inflation
under control - consumer control-consumer prices increased by only 10% less than 5% in 1997
1996 compared to more than 1,000% in 1994. At the same time, GDP
growth
slowed from 5.7% in 1994 to 2.9% about 3.0% in 1996 1997 due to tighter credit.
The steadily appreciating currency strong currency, another cornerstone of the Real Plan, has also encouraged imports,
contributing encouraged imports-contributing to a growing trade deficit, and depressed deficit-and
restrained export growth.
Brazil's more stable economy allowed it to
weather the fallout in 1995
from the Mexican peso crisis relatively well, and record
well. Record levels of
foreign investment have since flowed in, helping to swell official
support the Real Plan through financial shocks in October-November
1997 that occurred in the wake of the Asian financial crisis. These
shocks caused Brazil's foreign exchange reserves to $60 drop by $8 billion in 1996; stock markets
reflected this increased investor confidence, gaining 53% in dollar to $52 billion and the stock market to decline by about 25%, although
terms. it still ended up more than 30% for the year. President CARDOSO
remains committed to further reducing
inflation in 1997 and putting Brazil on track for expanded economic
growth, defending the Real Plan, but he faces several key challenges. Fiscal
challenges domestically and abroad. His package of fiscal reforms requiring
requiring constitutional amendments are stalled in has progressed slowly through the
balkanized Brazilian legislature; in
their absence, the government is continuing
continues to run deficits and has
limited room to relax its interest
and exchange rate policies much if
it wants to keep inflation under control. High interest rates have
made servicing domestic debt dramatically more burdensome for both control. Some foreign investors remain concerned about the viability
public of Brazil's exchange rate policy because of the country's fiscal and private sector entities, contributing
current account deficits. The government thus has to federal and state contend with the
budget problems possibility of capital flight or a speculative attack that could draw
down foreign reserves to a critical level and force a surge in bankruptcies. devaluation.

Possessing large and well-developed agricultural,
agricultural, mining, manufacturing, and service sectors, Brazil's
economy outweighs
that of all other South American countries and is
expanding its
presence in world markets. Prior to the institution of
a stabilization
plan-the plan--the Plano Real (Real Plan) in mid-1994,
stratospheric inflation
rates had disrupted economic activity and
discouraged foreign
investment. Since then, tight monetary policy
has brought inflation
under control-consumer control--consumer prices increased by less than 5% in 1997 2%
in 1998 compared to more than 1,000% in 1994. At the same time, GDP growth
growth slowed from 5.7% in 1994 to about 3.0% in 1997 due to tighter credit.
credit. The strong currency, another cornerstone of the Real Plan, has Plan faced its strongest challenge in 1998, as the
encouraged imports-contributing world financial crisis caused investors to a growing trade deficit-and
restrained export growth. Brazil's more stable economy allowed it to
weather closely examine the fallout
country's structural weaknesses. The most severe spillover for
Brazil--after Russia's debt default in 1995 from August 1998--created
unrelenting pressure on the Mexican peso crisis relatively currency which forced the country to
well. Record levels of foreign investment have flowed in, helping hike annual interest rates to 50%. Approximately $30 billion in
support capital left the Real Plan through financial shocks country in October-November August and September. After crafting a
1997 that occurred fiscal adjustment program and pledging progress on structural
reform, Brazil received a $41.5 billion IMF-led international
support program in November 1998. Capital continued to leach out of
the wake country, and investors, concerned about the rising mountain of
debt and currency widely-viewed as overvalued, stayed on the Asian financial crisis. These
shocks caused Brazil's foreign sidelines. In January 1999, Brazil made an abrupt shift of course in
exchange reserves to drop by $8 billion rate policy, abandoning the strong currency anti-inflation
to $52 billion and anchor of the stock market to decline by about 25%, although Real Plan. On 13 January 1999, Central Bank officials
it still ended up more than 30% for announced a one-time 8% devaluation of the year. real, and on 15 January
1999, the currency was declared to be freely floating. President CARDOSO
CARDOSO remains committed to defending limiting inflation and weathering the Real Plan, but he faces several key
challenges domestically financial crisis through austerity and abroad. His package of fiscal reforms sacrifice as the country
requiring constitutional amendments has progressed slowly through rides out a deep recession. He hopes the country will resume
balkanized Brazilian legislature; economic growth in their absence, the government second half of 1999, so that he can once
continues to run deficits again focus on his longer-term goal of reducing poverty and has limited room to relax its interest income
and exchange rate policies if it wants inequality. CARDOSO still hopes to keep inflation under
control. Some foreign investors remain concerned about the viability address mandated revenue sharing
of Brazil's exchange rate policy because of with the country's fiscal states and
current account deficits. The government thus has cumbersome procedures to contend with amend the constitution
possibility before the end of capital flight or a speculative attack that could draw
down foreign reserves to a critical level and force a devaluation. his second term.

Possessing large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries and is expanding its presence in world markets. In the late eighties and early nineties, high inflation hindered economic activity and investment. The "The Real Plan, Plan", instituted in the spring of 1994, sought to break inflationary expectations by pegging the real to the US dollar. Inflation was brought down to single digit annual figures, but not fast enough to avoid substantial real exchange rate appreciation during the transition phase of the Real Plan. "Real Plan". This appreciation meant that Brazilian goods were now more expensive relative to goods from other countries, which contributed to large current account deficits. However, no shortage of foreign currency ensued because of the financial community's renewed interest in Brazilian markets as inflation rates stabilized and the debt crisis of the eighties faded from memory. The maintenance of large current account deficits via capital account surpluses became problematic as investors became more risk averse to emerging market exposure as a consequence of the Asian financial crisis in 1997 and the Russian bond default in August 1998. After crafting a fiscal adjustment program and pledging progress on structural reform, Brazil received a $41.5 billion IMF-led international support program in November 1998. In January 1999, the Brazilian Central Bank announced that the real would no longer be pegged to the US dollar. This devaluation helped moderate the downturn in economic growth in 1999 that investors had expressed concerns about over the summer of 1998. Brazil's debt to GDP ratio of 48% for 1999 beat the IMF target and helped reassure investors that Brazil will maintain tight fiscal and monetary policy even with a floating currency. The economy is expected continued to push recover in 2000, with inflation remaining in the single digits and expected growth up to 3% for 2001 of 4.5%. Foreign direct investment set a record of more than $30 billion in 2000.

Possessing large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries and is expanding its presence in world markets. In the late eighties and early nineties, high inflation hindered economic activity and investment. "The Real Plan", instituted in the spring of 1994, sought to break inflationary expectations by pegging the real to the US dollar. Inflation was brought down to single digit annual figures, but not fast enough to avoid substantial real exchange rate appreciation during the transition phase of the "Real Plan". This appreciation meant that Brazilian goods were now more expensive relative to goods from other countries, which contributed to large current account deficits. However, no shortage of foreign currency ensued because of the financial community's renewed interest in Brazilian markets as inflation rates stabilized and the debt crisis of the eighties faded from memory. The maintenance of large current account deficits via capital account surpluses became problematic as investors became more risk averse to emerging market exposure as a consequence of the Asian financial crisis in 1997 and the Russian bond default in August 1998. After crafting a fiscal adjustment program and pledging progress on structural reform, Brazil received a $41.5 billion IMF-led international support program in November 1998. In January 1999, the Brazilian Central Bank announced that the real would no longer be pegged to the US dollar. This devaluation helped moderate the downturn in economic growth in 1999 that investors had expressed concerns about over the summer of 1998. Brazil's debt to GDP ratio for 1999 beat the IMF target and helped reassure investors that Brazil will maintain tight fiscal 1998, and monetary policy even with a floating currency. The economy continued to recover in 2000, with inflation remaining in the single digits and expected country posted moderate GDP growth. Economic growth for slowed considerably in 2001 - to less than 2% - because of 4.5%. Foreign direct investment set a record slowdown in major markets and the hiking of more than $30 billion interest rates by the Central Bank to combat inflationary pressures. Investor confidence was strong at yearend 2001, in 2000. part because of the strong recovery in the trade balance.

Possessing large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries and is expanding its presence in world markets. The maintenance of large current account deficits via capital account surpluses became problematic as investors became more risk averse to emerging market exposure markets as a consequence of the Asian financial crisis in 1997 and the Russian bond default in August 1998. After crafting a fiscal adjustment program and pledging progress on structural reform, Brazil received a $41.5 billion IMF-led international support program in November 1998. In January 1999, the Brazilian Central Bank announced that the real would no longer be pegged to the US dollar. This The consequent devaluation helped moderate the downturn in economic growth in 1999 that investors had expressed concerns about over the summer of 1998, 1999, and the country posted moderate GDP growth. growth in 2000. Economic growth slowed considerably in 2001 2001-03 - to less than 2% - because of a slowdown in major markets and the hiking of interest rates by the Central Bank to combat inflationary pressures. Investor confidence was strong at yearend 2001, in part because of New president DA SILVA, who took office 1 January 2003, has given priority to reforming the strong recovery in complex tax code, trimming the trade balance. overblown civil service pension system, and continuing the fight against inflation.

Possessing large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries and is expanding its presence in world markets. From 2001-03 real wages fell and Brazil's economy grew, on average, only 1.1% 2.2% per year, as the country absorbed a series of domestic and international economic shocks. That Brazil absorbed these shocks without financial collapse is a tribute to the resiliency of the Brazilian economy and the economic program put in place by former President CARDOSO and strengthened by President Lula LULA DA SILVA. In 2004, Brazil enjoyed more robust growth that yielded increases in employment and real wages. The three pillars of the economic program are a floating exchange rate, an inflation-targeting regime, and tight fiscal policy, which have been all reinforced by a series of IMF programs. The currency depreciated sharply in 2001 and 2002, which contributed to a dramatic current account adjustment: in 2003, 2003 and 2004, Brazil ran a record trade surplus surpluses and recorded the its first current account surplus surpluses since 1992. Productivity gains - particularly in agriculture - also contributed to the surge in exports, and Brazil in 2004 surpassed the previous year's record export level and again posted a current account surplus. While economic management has been good, there remain important economic vulnerabilities. The most significant are debt-related: the government's largely domestic debt increased steadily from 1994 to 2003, 2003 - straining government finances, finances - before falling as a percentage of GDP in 2004, while Brazil's foreign debt (a mix of private and public debt) is large in relation to Brazil's modest small (but growing) export base. Another challenge is maintaining economic growth over a period of time to generate employment and make the government debt burden more manageable.

Possessing Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries and is expanding its presence in world markets. From 2001-03 real wages fell and Brazil's economy grew, on average, average only 2.2% per year, as the country absorbed a series of domestic and international economic shocks. That Brazil absorbed these shocks without financial collapse is a tribute to the resiliency of the Brazilian economy and the economic program put in place by former President CARDOSO and strengthened by President LULA DA SILVA. In 2004, Brazil enjoyed more robust growth that yielded increases in employment and real wages. The three pillars of the economic program are a floating exchange rate, an inflation-targeting regime, and tight fiscal policy, all reinforced by a series of IMF programs. The currency depreciated sharply in 2001 and 2002, which contributed to a dramatic current account adjustment: adjustment; in 2003 and 2004, to 2005, Brazil ran record trade surpluses and recorded its first current account surpluses since 1992. Productivity gains - particularly in agriculture - also contributed to the surge in exports, and Brazil in 2004 2005 surpassed the previous year's record export level and again posted a current account surplus. level. While economic management has been good, there remain important economic vulnerabilities. The most significant are debt-related: the government's largely domestic debt increased steadily from 1994 to 2003 - straining government finances - before falling as a percentage of GDP in 2004, 2005, while Brazil's foreign debt (a mix of private and public debt) is large in relation to Brazil's small (but growing) export base. Another challenge is maintaining economic growth over a period of time to generate employment and make the government debt burden more manageable.

Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries and is expanding its presence in world markets. From 2001-03 real wages fell and Brazil's economy grew, on average only 2.2% per year, as the country absorbed a series of domestic and international economic shocks. That Brazil absorbed these shocks without financial collapse is a tribute to the resiliency of the Brazilian economy and the economic program put in place by former President CARDOSO and strengthened by President LULA DA SILVA. In Since 2004, Brazil has enjoyed more robust continued growth that yielded increases in employment and real wages. The three pillars of the economic program are a floating exchange rate, an inflation-targeting regime, and tight fiscal policy, all initially reinforced by a series of IMF programs. The currency depreciated sharply in 2001 and 2002, which contributed to a dramatic current account adjustment; in from 2003 to 2005, 2006, Brazil ran record trade surpluses and recorded its first current account surpluses since 1992. Productivity gains - particularly in agriculture - also contributed to the surge in exports, and Brazil in 2005 surpassed the previous year's record export level. exports. While economic management has been good, there remain important economic vulnerabilities. The most significant are debt-related: the government's largely domestic debt increased steadily from 1994 to 2003 - straining government finances - before falling as a percentage of GDP beginning in 2005, while Brazil's foreign 2003. Brazil improved its debt (a mix of private and public debt) is large profile in relation 2006 by shifting its debt burden toward real denominated and domestically held instruments. LULA DA SILVA restated his commitment to Brazil's small (but growing) export base. Another challenge is fiscal responsibility by maintaining economic growth over the country's primary surplus during the 2006 election. Following his second inauguration, LULA DA SILVA announced a period package of time further economic reforms to reduce taxes and increase public investment. A major challenge will be to maintain sufficient growth to generate employment and make reduce the government debt burden more manageable. burden.

Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries and is expanding its presence in world markets. From Having weathered 2001-03 real wages fell and Brazil's economy grew, on average only 2.2% per year, as the country absorbed a series of domestic and international economic shocks. That Brazil absorbed these shocks without financial collapse is a tribute to the resiliency of the Brazilian economy turmoil, capital inflows are regaining strength and the economic program put in place by former President CARDOSO and strengthened by President LULA DA SILVA. Since 2004, Brazil currency has enjoyed continued resumed appreciating. The appreciation has slowed export volume growth, but since 2004, Brazil's growth that has yielded increases in employment and real wages. The three pillars of resilience in the economic program are economy stems from commodity-driven current account surpluses, and sound macroeconomic policies that have bolstered international reserves to historically high levels, reduced public debt, and allowed a significant decline in real interest rates. A floating exchange rate, an inflation-targeting regime, and a tight fiscal policy, initially reinforced by a series policy are the three pillars of IMF programs. The currency depreciated sharply in 2001 and 2002, which contributed to a dramatic current account adjustment; from the economic program. From 2003 to 2006, 2007, Brazil ran record trade surpluses and recorded its first current account surpluses since 1992. Productivity gains - particularly in agriculture - also coupled with high commodity prices contributed to the surge in exports. While economic management has been good, there remain important economic vulnerabilities. The most significant are debt-related: the government's largely domestic debt increased steadily from 1994 to 2003 - straining government finances - before falling as a percentage of GDP beginning in 2003. Brazil improved its debt profile in 2006 by shifting its debt burden toward real denominated and domestically held instruments. LULA "LULA" DA SILVA restated his commitment to fiscal responsibility by maintaining the country's primary surplus during the 2006 election. Following his second inauguration, LULA "LULA" DA SILVA announced a package of further economic reforms to reduce taxes and increase public investment. A major challenge will be to maintain sufficient investment in infrastructure. The government's goal of achieving strong growth to generate employment and reduce while reducing the government debt burden. burden is likely to create inflationary pressures.

Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries and Brazil is expanding its presence in world markets. Having weathered 2001-03 financial turmoil, capital inflows are regaining strength and the currency has resumed appreciating. The appreciation has slowed export volume growth, but since 2004, Brazil's growth has yielded increases in employment and real wages. The resilience in the economy stems from commodity-driven current account surpluses, and sound macroeconomic policies that have bolstered international reserves to historically high levels, reduced public debt, and allowed a significant decline in real interest rates. A floating exchange rate, an inflation-targeting regime, and a tight fiscal policy are the three pillars of the economic program. From 2003 to 2007, Brazil ran record trade surpluses and recorded its first current account surpluses since 1992. Productivity gains coupled with high commodity prices contributed to the surge in exports. Brazil improved its debt profile in 2006 by shifting its debt burden toward real denominated and domestically held instruments. "LULA" DA SILVA LULA da Silva restated his commitment to fiscal responsibility by maintaining the country's primary surplus during the 2006 election. Following his second inauguration, "LULA" DA SILVA inauguration in October of that year, LULA da Silva announced a package of further economic reforms to reduce taxes and increase investment in infrastructure. The Brazil's debt achieved investment grade status early in 2008, but the government's goal of achieving attempt to achieve strong growth while reducing the debt burden is likely to create created inflationary pressures. For most of 2008, the Central Bank embarked on a restrictive monetary policy to stem these pressures. Since the onset of the global financial crisis in September, Brazil's currency and its stock market - Bovespa - have significantly lost value, -41% for Bovespa for the year ending 30 December 2008. Brazil incurred another current account deficit in 2008, as world demand and prices for commodities dropped in the second-half of the year.

Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries, and Brazil is expanding its presence in world markets. Since 2003, Brazil has steadily improved its macroeconomic stability, building up foreign reserves, and reducing its debt profile by shifting its debt burden toward real denominated and domestically held instruments. In 2008, Brazil became a net external creditor and two ratings agencies awarded investment grade status to its debt. After record strong growth in 2007 and 2008, the onset of the global financial crisis hit Brazil in September 2008. Brazil experienced two quarters of recession, as global demand for Brazil's commodity-based exports dwindled and external credit dried up. However, Brazil was one of the first emerging markets to begin a recovery. Consumer In 2010, consumer and investor confidence revived and GDP growth returned to positive reached 7.5%, the highest growth rate in 2010, boosted by an export recovery. Brazil's strong the past 25 years. Rising inflation led the authorities to take measures to cool the economy; these actions and the deteriorating international economic situation slowed growth to 2.7% in 2011, and 1.5% in 2012. Despite slower growth, in 2011 Brazil overtook the United Kingdom as the world's seventh largest economy in terms of GDP. Unemployment is at historic lows and Brazil's traditionally high level of income inequality has declined for each of the last 14 years. Brazil's historically high interest rates make have made it an attractive destination for foreign investors. Large capital inflows over the past year several years have contributed to the rapid appreciation of its currency the currency, hurting the competitiveness of Brazilian manufacturing and led leading the government to intervene in foreign exchanges markets and raise taxes on some foreign investments. capital inflows. President Dilma ROUSSEFF has pledged to retain retained the previous administration's commitment to inflation targeting by the Central Bank, central bank, a floating exchange rate, and fiscal restraint. In an effort to boost growth, in 2012 the administration implemented a series of more expansionary monetary and fiscal policies that have failed to stimulate much growth.

Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries, and Brazil is expanding its presence in world markets. Since 2003, Brazil has steadily improved its macroeconomic stability, building up foreign reserves, and reducing its debt profile by shifting its debt burden toward real denominated and domestically held instruments. In 2008, Brazil became a net external creditor and two ratings agencies awarded investment grade status to its debt. After strong growth in 2007 and 2008, the onset of the global financial crisis hit Brazil in 2008. Brazil experienced two quarters of recession, as global demand for Brazil's commodity-based exports dwindled and external credit dried up. However, Brazil was one of the first emerging markets to begin a recovery. In 2010, consumer and investor confidence revived and GDP growth reached 7.5%, the highest growth rate in the past 25 years. Rising inflation led the authorities to take measures to cool the economy; these actions and the deteriorating international economic situation slowed growth to 2.7% in 2011, and 1.5% 1.3% in 2012. Despite slower growth, in 2011 Brazil overtook the United Kingdom as the world's seventh largest economy in terms of GDP. Unemployment is at historic lows and Brazil's traditionally high level of income inequality has declined for each of the last 14 years. Brazil's historically high interest rates have made it an attractive destination for foreign investors. Large capital inflows over the past several years have contributed to the appreciation of the currency, hurting the competitiveness of Brazilian manufacturing and leading the government to intervene in foreign exchanges exchange markets and raise taxes on some foreign capital inflows. President Dilma ROUSSEFF has retained the previous administration's commitment to inflation targeting by the central bank, a floating exchange rate, and fiscal restraint. In an effort to boost growth, in 2012 the administration implemented a series of somewhat more expansionary monetary and fiscal policies policy that have has failed to stimulate much growth.

Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, and a rapidly expanding middle class, Brazil's economy outweighs that of all other South American countries, and Brazil is expanding its presence in world markets. Since 2003, Brazil has steadily improved its macroeconomic stability, building up foreign reserves, and reducing its debt profile by shifting its debt burden toward real denominated and domestically held instruments. In 2008, Brazil became a net external creditor and two ratings agencies awarded investment grade status to its debt. After strong growth in 2007 and 2008, the onset of the global financial crisis hit Brazil in 2008. Brazil experienced two quarters of recession, as global demand for Brazil's commodity-based exports dwindled and external credit dried up. However, Brazil was one of the first emerging markets to begin a recovery. In 2010, consumer and investor confidence revived and GDP growth reached 7.5%, the highest growth rate in the past 25 years. Rising inflation led the authorities to take measures to cool the economy; these actions and the deteriorating international economic situation slowed growth to 2.7% in 2011, and 1.3% in 2012. 2011-13. Unemployment is at historic lows and Brazil's traditionally high level of income inequality has declined for each of the last 14 years. Brazil's historically high interest rates have made it an attractive destination for foreign investors. Large capital inflows over the past several years have contributed to the appreciation of the currency, hurting the competitiveness of Brazilian manufacturing and leading the government to intervene in foreign exchange markets and raise taxes on some foreign capital inflows. President Dilma ROUSSEFF has retained the previous administration's commitment to inflation targeting by the central bank, a floating exchange rate, and fiscal restraint. In an effort to boost growth, in 2012 the administration implemented a somewhat more expansionary monetary policy that has failed to stimulate much growth.

Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, and a rapidly expanding middle class, Brazil's economy outweighs that of all other South American countries, and Brazil is expanding its presence in world markets. Since 2003, Brazil has steadily improved its macroeconomic stability, building up foreign reserves, and reducing its debt profile by shifting its debt burden toward real denominated and domestically held instruments. In Since 2008, Brazil became a net external creditor and two all three of the major ratings agencies awarded investment grade status to its debt. After strong growth in 2007 and 2008, the onset of the global financial crisis hit Brazil in 2008. Brazil experienced two quarters of recession, as global demand for Brazil's commodity-based exports dwindled and external credit dried up. However, Brazil was one of the first emerging markets to begin a recovery. In 2010, consumer and investor confidence revived and GDP growth reached 7.5%, the highest growth rate in the past 25 years. Rising inflation led the authorities to take measures to cool the economy; these actions and the deteriorating international economic situation slowed growth in 2011-13. Unemployment is at After reaching historic lows and of 4.5% in early 2014, the unemployment rate remains low, but is rising. Brazil's traditionally high level of income inequality has declined for each of the last 14 15 years. Brazil's historically GDP growth has slowed since 2011, due to several factors, including: overdependence on exports of raw commodities, low productivity, high interest rates operational costs, persistently high inflation, and low levels of investment. Brazil’s fiscal and current account balances have made it an attractive destination for foreign investors. Large capital inflows over eroded during the past several four years have contributed to the appreciation of as the currency, hurting government attempted to boost economic growth through targeted tax cuts for industry and incentives to spur household consumption. After winning re-election in October 2014 by a historically narrow margin, President Dilma ROUSSEFF appointed a new economic team led by Finance Minister Joaquim LEVY, who introduced a fiscal austerity package intended to restore the competitiveness primary account surplus to 1.2% of Brazilian manufacturing GDP and leading preserve the government country’s investment-grade sovereign credit rating. Brazil seeks to intervene in foreign exchange markets strengthen its workforce and raise taxes its economy over the long run by imposing local content and technology transfer requirements on some foreign capital inflows. President Dilma ROUSSEFF has retained businesses, by investing in education through social programs such as Bolsa Familia and the previous administration's commitment to inflation targeting Brazil Science Mobility Program, and by investing in research in the central bank, a floating exchange rate, areas of space, nanotechnology, healthcare, and fiscal restraint. energy.

Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, and a rapidly expanding middle class, Brazil's economy outweighs that of all other South American countries, and Brazil is expanding its presence in world markets. Since 2003, Brazil has steadily improved its macroeconomic stability, building up foreign reserves, and reducing its debt profile by shifting its debt burden toward real denominated and domestically held instruments. Since 2008, Brazil became a net external creditor and all three of the major ratings agencies awarded investment grade status to its debt.
After strong growth in 2007 and 2008, the onset of the global financial crisis hit Brazil in 2008. Brazil experienced two quarters of recession, as global demand for Brazil's commodity-based exports dwindled and external credit dried up. However, Brazil was one of the first emerging markets to begin a recovery. In 2010, consumer and investor confidence revived and GDP growth reached 7.5%, the highest growth rate in the past 25 years. After reaching historic lows of 4.5% in early 2014, the unemployment rate remains low, but is rising. Brazil's traditionally high level of income inequality has declined for each of the last 15 years. GDP growth has slowed since 2011, due to several factors, including: including overdependence on exports of raw commodities, low productivity, high operational costs, persistently high inflation, and low levels of investment. After reaching historic lows of 4.8% in 2014, the unemployment rate remains low, but is rising. Brazil's traditionally high level of income inequality has declined for the last 15 years.
Brazil’s fiscal and current account balances have eroded during the past four years as the government attempted to boost economic growth through targeted tax cuts for industry and incentives to spur household consumption. After winning re-election reelection in October 2014 by a historically narrow margin, President Dilma ROUSSEFF appointed a new economic team led by Finance Minister Joaquim LEVY, who introduced a fiscal austerity package intended to restore the primary account surplus (before interest expenditures are included) to 1.2% of GDP and preserve the country’s country's investment-grade sovereign credit rating. LEVY encountered political headwinds and an economy facing more challenges than he anticipated. The target for the primary account surplus fell to a deficit of 2%, and two of the three main credit rating agencies downgraded Brazil to “junk” status.
Brazil seeks to strengthen its workforce and its economy over the long run by imposing local content and technology transfer requirements on foreign businesses, by investing in education through social programs such as Bolsa Familia and the Brazil Science Mobility Program, and by investing in research in the areas of space, nanotechnology, healthcare, and energy.

Brazil is the eighth-largest economy in the world, but is recovering from a recession in 2015 and 2016 that ranks as the worst in the country’s history. Falling commodity prices reduced export revenues and investment, which weakened the Brazilian real and cut tax revenues. The weaker real made existing public debt, which was largely denominated in foreign currency, more expensive. Lower tax revenues strained the government budget.
Economic reforms proposed in 2016 aim In 2017, Brazil`s GDP grew 1%, inflation fell to slow the growth historic lows of government spending 2.9%, and reduce barriers to foreign investment. Government spending growth helped to push public debt to 70% of GDP at the end of 2016 up Central Bank lowered benchmark interest rates from 50% in 2012. Policies to strengthen Brazil’s workforce and industrial sector, such as local content requirements, may have boosted employment at the expense of investment.
Former President Dilma ROUSSEFF was impeached and convicted 13.75% in August 2016 for moving funds among government budgets; the to 7%. The economy has also been negatively affected by multiple corruption scandals involving private companies and government officials. officials, including the impeachment and conviction of Former President Dilma ROUSSEFF in August 2016. Sanctions against the firms involved — some of the largest in Brazil — has have limited their business opportunities, producing a ripple effect on associated businesses and contractors. In addition, investment in these contractors but creating opportunities for foreign companies to step into what had been a closed market. The succeeding TEMER administration has declined because implemented a series of fiscal and structural reforms to restore credibility to government finances. Congress approved legislation in December 2016 to cap public spending. Government spending growth had pushed public debt to 73.7% of GDP at the scandals.
end of 2017, up from over 50% in 2012. The government also boosted infrastructure projects, such as oil and natural gas auctions, in part to raise revenues. Other economic reforms, proposed in 2016, aim to reduce barriers to foreign investment, and to improve labor conditions. Policies to strengthen Brazil’s workforce and industrial sector, such as local content requirements, have boosted employment, but at the expense of investment. Brazil is a member of the Common Market of the South (Mercosur), a trade bloc including that includes Argentina, Paraguay, Uruguay, Paraguay and Venezuela. Uruguay - Venezuela’s membership in the organization was suspended In August 2017. After the Asian and Russian financial crises, Mercosur adopted a protectionist stance to guard against exposure to the volatility of volatile foreign markets. Brazil markets and its Mercosur partners have pledged to open it currently is negotiating Free Trade Agreements with the bloc to more trade European Union and investment, but changes require approval of all five members, which makes policy adjustments too difficult to enact. Canada.

Brazil is the eighth-largest economy in the world, but is recovering from a recession in 2015 and 2016 that ranks as the worst in the country’s history. In 2017, Brazil`s GDP grew 1%, inflation fell to historic lows of 2.9%, and the Central Bank lowered benchmark interest rates from 13.75% in 2016 to 7%.
The economy has been negatively affected by multiple corruption scandals involving private companies and government officials, including the impeachment and conviction of Former President Dilma ROUSSEFF in August 2016. Sanctions against the firms involved — some of the largest in Brazil — have limited their business opportunities, producing a ripple effect on associated businesses and contractors but creating opportunities for foreign companies to step into what had been a closed market.
The succeeding TEMER administration has implemented a series of fiscal and structural reforms to restore credibility to government finances. Congress approved legislation in December 2016 to cap public spending. Government spending growth had pushed public debt to 73.7% of GDP at the end of 2017, up from over 50% in 2012. The government also boosted infrastructure projects, such as oil and natural gas auctions, in part to raise revenues. Other economic reforms, proposed in 2016, aim to reduce barriers to foreign investment, and to improve labor conditions. Policies to strengthen Brazil’s workforce and industrial sector, such as local content requirements, have boosted employment, but at the expense of investment.
Brazil is a member of the Common Market of the South (Mercosur), a trade bloc that includes Argentina, Paraguay and Uruguay - Venezuela’s membership in the organization was suspended In August 2017. After the Asian and Russian financial crises, Mercosur adopted a protectionist stance to guard against exposure to volatile foreign markets and it currently is negotiating Free Trade Agreements with the European Union and Canada.

upper-middle income, upper-middle-income, largest Latin American economy; Mercosur, BRICS, G20 member and OECD accession candidate; growth driven by strong domestic consumption; tax simplification reforms aimed at addressing business conditions and lagging productivity; monetary tightening helping curb inflation rate; high inequality in income and access to health and education