Economy - overview: 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 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 prices increased by only 10% in 1996 compared to more than 1,000% in 1994. At the same time, GDP growth slowed from 5.7% in 1994 to 2.9% in 1996 due to tighter credit. The steadily appreciating currency has also encouraged imports, contributing to a growing trade deficit, and depressed export growth. Brazil's more stable economy allowed it to weather the fallout in 1995 from the Mexican peso crisis relatively well, and record levels of foreign investment have since flowed in, helping to swell official foreign exchange reserves to $60 billion in 1996; stock markets reflected this increased investor confidence, gaining 53% in dollar terms. President CARDOSO remains committed to further reducing inflation in 1997 and putting Brazil on track for expanded economic growth, but he faces several key challenges. 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 dramatically more burdensome for both public and private sector entities, contributing to federal and state budget problems and a surge in bankruptcies.
GDP: purchasing power parity - $1.022 trillion (1996 est.)
GDP - per capita: purchasing power parity - $6,300 (1996 est.)
GDP - composition by sector: agriculture: 13% industry: 38% services: 49% (1995)
Inflation rate - consumer price index: 10% (1996)
Labor force: total: 57 million (1989 est.) by occupation: services 42%, agriculture 31%, industry 27%
Budget: revenues: $86 billion expenditures: $90 billion, including capital expenditures of $NA (1995)