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 2% in 1998 compared to more than 1,000% in 1994. At the same time, GDP growth slowed from 5.7% in 1994 to about 3.0% in 1997 due to tighter credit. The Real Plan faced its strongest challenge in 1998, as the world financial crisis caused investors to more closely examine the country's structural weaknesses. The most severe spillover for Brazil—after Russia's debt default in August 1998—created unrelenting pressure on the currency which forced the country to hike annual interest rates to 50%. Approximately $30 billion in capital left the country in August and September. 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. Capital continued to leach out of the country, and investors, concerned about the rising mountain of debt and currency widely-viewed as overvalued, stayed on the sidelines. In January 1999, Brazil made an abrupt shift of course in exchange rate policy, abandoning the strong currency anti-inflation anchor of the Real Plan. On 13 January 1999, Central Bank officials announced a one-time 8% devaluation of the real, and on 15 January 1999, the currency was declared to be freely floating. President CARDOSO remains committed to limiting inflation and weathering the financial crisis through austerity and sacrifice as the country rides out a deep recession. He hopes the country will resume economic growth in the second half of 1999, so that he can once again focus on his longer-term goal of reducing poverty and income inequality. CARDOSO still hopes to address mandated revenue sharing with the states and cumbersome procedures to amend the constitution before the end of his second term.

GDP: purchasing power parity—$1.0352 trillion (1998 est.)

GDP—real growth rate: 0.5% (1998)

GDP—per capita: purchasing power parity—$6,100 (1998 est.)

GDP—composition by sector:
agriculture: 14%
industry: 36%
services: 50% (1997)

Population below poverty line: 17.4% (1990 est.)

Household income or consumption by percentage share:
lowest 10%: 0.8%
highest 10%: 47.9% (1995)

Inflation rate (consumer prices): 2% (1998)

Labor force: 57 million (1989 est.)

Labor force—by occupation: services 42%, agriculture 31%, industry 27%

Unemployment rate: 8.5% (1998 est.)

Budget:
revenues: $151 billion
expenditures: $149 billion, including capital expenditures of $36 billion (1998)

Industries: textiles, shoes, chemicals, cement, lumber, iron ore, tin, steel, aircraft, motor vehicles and parts, other machinery and equipment

Industrial production growth rate: 4.5% (1997 est.)

Electricity—production: 291.63 billion kWh (1997)

Electricity—production by source:
fossil fuel: 4.38%
hydro: 92.09%
nuclear: 0.8%
other: 2.73% (1996)

Electricity—consumption: 323.215 billion kWh (1996)

Electricity—exports: 8 million kWh (1996)

Electricity—imports: 37.5 billion kWh (1996)
note: imported electricity from Paraguay

Agriculture—products: coffee, soybeans, wheat, rice, corn, sugarcane, cocoa, citrus; beef

Exports: $51 billion (f.o.b., 1998)

Exports—commodities: iron ore, soybean bran, orange juice, footwear, coffee, motor vehicle parts

Exports—partners: EU 28%, Latin America (excluding Argentina) 23%, US 20%, Argentina 12% (1996)

Imports: $57.6 billion (f.o.b., 1998)

Imports—commodities: crude oil, capital goods, chemical products, foodstuffs, coal

Imports—partners: EU 26%, US 22%, Argentina 13%, Japan 5% (1996)

Debt—external: $258.1 billion (December 1998)

Economic aid—recipient: $1.012 billion (1995)

Currency: 1 real (R$) = 100 centavos

Exchange rates: reals (R$) per US$1—1.501 (January 1999), 1.161 (1998), 1.078 (1997), 1.005 (1996), 0.918 (1995), 0.639 (1994); CR$ per US$1—390.845 (January 1994)
note: the real (R$) was introduced on 1 July 1994, equal to 2,750 cruzeiro reais; from October 1994 through 14 January 1999, the official rate was determined by a managed float; since 15 January 1999, the official rate floats independently with respect to the US$

Fiscal year: calendar year