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Brazil Economy 1996
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 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. Itamar FRANCO, who assumed
the presidency following President COLLOR's resignation in December 1992,
was out of step with COLLOR's reform agenda; initiatives to redress fiscal
problems, privatize state enterprises, and liberalize trade and investment
policies 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.
GDP - purchasing power parity - $886.3 billion (1994 est.)
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National product real growth rate:
-
National product per capita:
-
Inflation rate (consumer prices):
$109 billion, including capital expenditures of $23 billion (1992)
$43.6 billion (f.o.b., 1994 est.)
iron ore, soybean bran, orange juice, footwear, coffee, motor vehicle parts
EC 27.6%, Latin America 21.8%, US 17.4%, Japan 6.3% (1993)
$33.2 billion (f.o.b., 1994 est.)
crude oil, capital goods, chemical products, foodstuffs, coal
US 23.3%, EC 22.5%, Middle East 13.0%, Latin America 11.8%, Japan 6.5%
(1993)
growth rate 9.5% (1993); accounts for 39% of GDP
textiles, shoes, chemicals, cement, lumber, mining (iron ore, tin), steel
making, machine building - including aircraft, motor vehicles, motor vehicle
parts and assemblies, and other machinery and equipment
accounts for 11% of GDP; world's largest producer and exporter of coffee and
orange juice concentrate and second-largest exporter of soybeans; other
products - rice, corn, sugarcane, cocoa, beef; self-sufficient in food,
except for wheat
illicit producer of cannabis and coca, mostly for domestic consumption;
government has a small-scale eradication program to control cannabis and
coca cultivation; important transshipment country for Bolivian and Colombian
cocaine headed for the US and Europe
US commitments, including Ex-Im (FY70-89), $2.5 billion; Western (non-US)
countries, ODA and OOF bilateral commitments (1970-89), $10.2 million; OPEC
bilateral aid (1979-89), $284 million; former Communist countries (1970-89),
$1.3 billion
1 real (R$) = 100 centavos
R$ per US$1 - 0.85 (January 1995); CR$ per US$1 - 390.845 (January 1994),
88.449 (1993), 4.513 (1992), 0.407 (1991), 0.068 (1990)
on 1 August 1993 the cruzeiro real (CR$), equal to 1,000 cruzeiros, was
introduced; another new currency, the real, was introduced on 1 July 1994,
equal to 2,750 cruzeiro reals
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