Economy of Brazil

Brazil's GDP (PPP and Nominal) is the highest of Latin America with large and developed agricultural, mining, manufacturing,and service sectors, as well as a large labor pool. 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. Major export products include aircraft, coffee, automobiles, soybean, iron ore, orange juice, steel, ethanol, textiles, footwear, corned beef and electrical equipment.Brazil has a diversified middle income economy with wide variations in development levels. Most large industry is agglomerated in the Southern and South East states. The Northeast is the poorest region of Brazil, but it has attracted new investments in infrastructure for the tourism sector and intensive agricultural schemes.According to the International Monetary Fund and the World Bank, Brazil has the ninth largest economy in the world by purchasing power parity and tenth largest at market exchange rates.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 has 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 IMF rescue package in mid-2002 in the amount of USD 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 USD 193.8bn 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.