How to Export to Brazil - Sprint Lazio

Brazil – Ministry of External Relations
II. OVERVIEW OF THE BRAZILIAN ECONOMY
The economic policy adopted by the country in recent years has focused on three
fundamental objectives: inflation control, foreign accounts equilibrium and promotion
of economic development. After being hit by successive international crises – Mexico
(1995), Asia (1997) and Russia (1998) – Brazil had to face a series of adjustments in
order to preserve the economic stability it had achieved in the previous years.
Such adjustments included foreign currency fluctuation, the adoption of an inflation
targeting system – the Central Bank establishes a margin within which the annual
inflation may fluctuate and these figures are published in order to allow the coordination
of expectations of the economic agents and to create an “anchor” for prices – and the
efforts to make a fiscal adjustment, based on the generation of a substantial surplus in
the government’s primary accounts (which exclude the interest payments on public
debt). The fiscal adjustment was strenghened by the approval of the Fiscal
Responsibility Law, which sets up the limits for public expenditure at all government
levels, and by some important structural reforms, such as the one made on the social
security systems for civil servants and private company employees.
Recent economic indicators have pointed to the success of the economic policy
adopted, with GDP growth, constant decline in inflation rates and lower vulnerability
to foreign crises. GDP grew on average by 2.6% per year and employment and income
rates increased significantly between 2003 and 2005. The government has adopted
measures that contribute to the recovery of domestic demand, such as the promotion
of credit and the temporary reduction of taxation. As for prices, the efforts to control
inflation yielded significant results, allowing a gradual relaxation of monetary policy,
while the policy for fiscal responsibility has generated a drop in the nominal deficit of
the public sector and of the public debt as well. Furthermore, the country has managed
to achieve a solid position in its foreign accounts in recent years, with high trade and
current account surpluses.
II.1. Output
The Brazilian GDP reached R$ 1,938 billion in 2005, equivalent to US$ 828 billion. The
figures get even better when measured against purchasing power parity, with a GDP of
over US$ 1,5 trillion, one of the highest in the world. Despite the slowdown in 2005,
when GDP grew only by 2.3% (against 4.9% in 2004), the Brazilian GDP is on a recovery
course in 2006, with an estimated 3.3% per year, and revving up to 4% per year in
2007 (Graph II.1).
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