Economy

Brazil has the ninth-largest economy in the world at purchasing power parity as of 2006. Brazil has a diversified middle income economy with wide variations in levels of development.

Possessing large and well-developed agricultural, mining, manufacturing, and service sectors, as well as a large labour pool, Brazil's GDP (PPP) outweighs that of any other Latin American country, being the core economy of Mercosul. The country has been expanding its presence in world markets. Major export products include aircraft, coffee, vehicles, soybean, iron ore, orange juice, steel, textiles, footwear, corned beef and electrical equipment.

According to the International Monetary Fund and the World Bank, Brazil has the ninth largest economy in the world at Purchasing Power Parity and eleventh largest at market exchange rates. Brazil has a diversified middle income economy with wide variations in development levels. Most large industry is agglomerated in the South and South-East. The North-East is the poorest region of Brazil, but it is beginning to attract new investment. Brazil's diverse industries range from automobiles, steel and petrochemicals to computers, aircraft, and consumer goods and amount to one-third of the GDP. With the increased economic stability provided by the Plano Real, Brazilian and multinational businesses have invested heavily in new equipment and technology, a large proportion of which has been purchased from North American enterprises.

Brazil has a diverse and sophisticated services industry as well. During the early 1990s, the banking sector amounted to as much as 16% of GDP. Although undergoing a major overhaul, Brazilian financial services industry provides local businesses with a wide range of products and is attracting numerous new entrants, including US financial firms. The São Paulo and Rio de Janeiro stock exchanges are undergoing a consolidation.

Although Brazil's economy is progressive and regionally important, the problems of widespread state bureaucracy, corruption, poverty and illiteracy are still major barriers to furthering its development.

Currency Issues

Brazil's currency, the Brazilian Real (R$), was introduced in 1994, and is largely seen as a success. Currently, it is considered to be overvalued against the dollar, which hurts exports and helps imports.

However, the strength of the real has gained the confidence of investors, allowing the first bond issued in reals instead of dollars in 2004. Issuing bonds in local currency gives more protection against currency fluctuation and international economic instability.