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Brazil Economy 1996

    • Overview:
      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.

    • National product:
      GDP - purchasing power parity - $886.3 billion (1994 est.)

    • National product real growth rate:
      5.3% (1994 est.)

    • National product per capita:
      $5,580 (1994 est.)

    • Inflation rate (consumer prices):
      1,094% (1994 est.)

    • Unemployment rate:
      4.9% (1993)

    • Budget:

        $113 billion

        $109 billion, including capital expenditures of $23 billion (1992)

    • Exports:
      $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)

    • Imports:
      $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)

    • External debt:
      $134 billion (1994)

    • Industrial production:
      growth rate 9.5% (1993); accounts for 39% of GDP

    • Electricity:

        55,130,000 kW

        241.4 billion kWh

        consumption per capita:
        1,589 kWh (1993)

    • Industries:
      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

    • Agriculture:
      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 drugs:
      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

    • Economic aid:

        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

    • Currency:
      1 real (R$) = 100 centavos

    • Exchange rates:
      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

    • Fiscal year:
      calendar year

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