Brazil is the largest national economy in Latin America, the world's tenth largest economy at market exchange rates and the ninth largest in purchasing power parity (PPP), according to the International Monetary Fund and the World Bank; with large and developed agricultural, mining, manufacturing and service sectors, as well as a large labor pool. Brazilian exports are booming, creating a new generation of tycoons.
Major export products include aircraft, coffee, automobiles, soybean, iron ore, orange juice, steel, ethanol, textiles, footwear, corned beef and electrical equipment. The country has been expanding its presence in international financial and commodities markets, and is regarded as one of the group of four emerging economies called BRIC. The biggest investment boom in history is under way; in 2007, Brazil launched a four-year plan to spend $300 billion to modernise its road network, power plants and ports.
Brazil had pegged its currency, the real, to the U.S. dollar in 1994. However, after the East Asian financial crisis, the Russian default in 1998 and the series of adverse financial events that followed it, the Brazilian central bank temporarily changed its monetary policy to a managed-float scheme while undergoing a currency crisis, until definitively changing the exchange regime to free-float in January 1999. Brazil received an International Monetary Fund rescue package in mid-2002 in the amount of $30.4 billion, a record sum at that time. The IMF loan was paid off early by Brazil's central bank in 2005 (the due date was scheduled for 2006).
One of the issues the Brazilian central bank is currently dealing with is the excess of speculative short-term capital inflows to the country in the past few months, which might explain in part the recent downfall of the U.S. dollar against the real in the period. Nonetheless, foreign direct investment (FDI), related to long-term, less speculative investment in production, is estimated to be $193.8 billion for 2007. Inflation monitoring and control currently plays a major role in Brazil's Central Bank activity in setting out short-term interest rates as a monetary policy measure. |
