Brazil

In 1970 the Brazilian economy is estimated to have grown by 9.5 percent, after having grown by 9.0 percent in 1969 and 9.3 percent in 1968. These growth rates are reminiscent... Show More + of the rapid pace of growth sustained by Brazil in the 1950s. Entirely different, however, is the underlying economic strategy pursued in recent years by the Brazilian Government. Previous rapid growth rates were generated by import substituting industrialization achieved within the confines of high tariff barriers. Needed infrastructure and partial absorption of the labor surplus left by capital intensive industrial development were financed largely by inflationary currency emission. Accumulation of coffee surpluses was also a powerful inflation factor. Some analysts have asserted that the rapid economic growth recently achieved by Brazil represents a cyclical upswing and is not susceptible to being sustained even over the medium term. This issue cannot be resolved at the present time. The judgment of this report is that the Brazilian economy, one of the best endowed in the world, is capable of very rapid sustained growth given proper economic management and a favorable external environment. It is thus on the basis of the expectation that the quality of economic management achieved during the past few years will not deteriorate, and, in particular, that the Government will continue to attune the pace of growth to the savings which its own constituents and the rest of the world are willing to make available, that this report recommends strong support by development lenders for Brazil's ambitious economic goals. Show Less -

Output and employment led by the industrial sector, Brazil's gross domestic product grew by 8.4 percent in 1968 and 9.0 percent in 1969. The combination of completion... Show More + of the economic recovery begun in mid-1967 and the political uncertainty which followed the illness of President Costa e Silva led to a slowdown in industrial growth in the latter part of 1969. This slowdown was, however, comparatively short-lived; by the second quarter of 1970 the economy was again expanding. Aided by good crops (except for coffee), this year's growth in gross domestic product (GDP) should be about 7.0 percent. The economy's growth since 1967 contrasts sharply with the 1963- 66 period when per capita output was almost stagnant. Brazil is again achieving growth rates similar to the 1950-62 period, when GDP grew at an average annual rate of 7.0 percent -- and is facing the future with renewed optimism. The financial authorities decided in 1967 that relatively large increases in private sector credit were needed to support a high level of economic activity. As a consequence, bank credit to the private sector rose from 12 percent of GDP at the end of 1966 to almost 19 percent of GDP at the end of 1969. Despite this apparently rapid credit expansion, liquidity has in fact been restricted (as is indicated by the rising rates of bankruptcies and bills protested throughout 1969 and the continued high levels during the first half of 1970). Because of the very limited sources of medium and long-term credit in Brazil, substantial parts of the expansion in bank loans (all short--terms) and in financial credits from abroad have no doubt gone to finance the increase in fixed investments. Furthermore, the possibilities of financing investments out of cash flow have been limited by increases in the real interest rates that accompanied the decline in inflation in 1964-67. Show Less -

Brazil's dominating economic concern in the post-war period has been how to maintain a high rate of growth and at the same time avoid the internal and external financial... Show More + instability that will theater future growth. The stabilization program begun in 1964 was a necessary, difficult, set of measures to restore order in the country's internal and external finances, which had deteriorated to a point where growth had almost ceased, external payments were in arrears and savings and investments were shrinking, while inflation had reached an annual rate of over 100 percent. During the next three years progress was made in correcting some of the profound structural maladjustments of the economy; growth rates were modest in 1964-1967 since relatively little could be done to accelerate growth until sufficient progress had been made in solving these basic problems. When the administration of President Costa e Silva came into officer in March 1967 it found the economy in a recession, but it also found that the reforms of the three previous years had created a much firmer base for renewed economic growth. Monetary and fiscal measures were taken to revive demand, but in sufficient moderation to avoid accelerating inflation, so that 1967 and 1968 were years of substantial growth at the same time as further progress was made toward price stabilization. Brazil's economic prospects have improved dramatically as a consequence of the policies followed in recent years. The rate of inflation has been brought down from close to 100 percent to about 20 percent. Public finances have been greatly improved; expenditures are under better control, tax revenues have been raised from 20 to 30 percent of gross national product (GNP) and borrowing from the banking system to finance budget deficits has been almost eliminated. The freedom of state governments to pursue financial policies inconsistent with those of the Federal Government has been curtailed and progress has been made to use the federal tax system as a device to channel resources from the richest areas to the less developed regions, especially the Northeast. In 1968 gross domestic product (GDP) rose by 7.4 percent to US$27.3 billion. Investment and industrial production led the recovery. Investment expenditures jumped 25 percent the depressed level of 1967. Industrial output increased by 15 percent and industrial employment rose by 12 percent over prior year levels. These favorable trends have continued in the first half of 1969; all of the major economic indicators registered new highs during this period. Show Less -

Brazil's dominating economic concern in the post-war period has been how to maintain a high rate of growth and at the same time avoid the internal and external financial... Show More + instability that will theater future growth. The stabilization program begun in 1964 was a necessary, difficult, set of measures to restore order in the country's internal and external finances, which had deteriorated to a point where growth had almost ceased, external payments were in arrears and savings and investments were shrinking, while inflation had reached an annual rate of over 100 percent. During the next three years progress was made in correcting some of the profound structural maladjustments of the economy; growth rates were modest in 1964-1967 since relatively little could be done to accelerate growth until sufficient progress had been made in solving these basic problems. When the administration of President Costa e Silva came into officer in March 1967 it found the economy in a recession, but it also found that the reforms of the three previous years had created a much firmer base for renewed economic growth. Monetary and fiscal measures were taken to revive demand, but in sufficient moderation to avoid accelerating inflation, so that 1967 and 1968 were years of substantial growth at the same time as further progress was made toward price stabilization. Brazil's economic prospects have improved dramatically as a consequence of the policies followed in recent years. The rate of inflation has been brought down from close to 100 percent to about 20 percent. Public finances have been greatly improved; expenditures are under better control, tax revenues have been raised from 20 to 30 percent of gross national product (GNP) and borrowing from the banking system to finance budget deficits has been almost eliminated. The freedom of state governments to pursue financial policies inconsistent with those of the Federal Government has been curtailed and progress has been made to use the federal tax system as a device to channel resources from the richest areas to the less developed regions, especially the Northeast. In 1968 gross domestic product (GDP) rose by 7.4 percent to US$27.3 billion. Investment and industrial production led the recovery. Investment expenditures jumped 25 percent the depressed level of 1967. Industrial output increased by 15 percent and industrial employment rose by 12 percent over prior year levels. These favorable trends have continued in the first half of 1969; all of the major economic indicators registered new highs during this period. Show Less -

The Brazilian economy in the post-war period has undergone more profound transformations in structure as well as policies than most other developing countries. Most... Show More + of the 'fifties were characterized by stagnating exports, rapid import substitution and in the second half of the decade the large special stimulus provided by the building of Brasilia. The combination of these factors resulted in a relatively rapid expansion of domestic production together with an annual inflation which until 1959 varied between 14 and 26 percent. Thereafter it accelerated steadily, reaching more than 100 percent in the early months of 1964. During the next few years it should be possible for Brazil to resume economic growth while at the same time achieving substantial further reductions in the rate of price inflation. After having achieved an average annual growth rate of 6 percent between 1950 and 1962, gross domestic product (GDP) on average expanded by 3.3 percent annually in the next 4 years. It seems reasonable to expect an average growth of about 5.5 percent between 1966 and 1971; industrial production which in the period of rapid expansion had grown at more than 9 percent annually, should resume its leading role and increase by at least 7 percent per year while agriculture may well grow by some 5 percent annually, i.e., fractionally more than in the past. Output growth of this general order is likely to require a continuation of the past trend in investment: gross domestic capital formation grew at annual average rates of 9 percent between 19.50 and 1962 and of 10 percent between 1962 and 1966; in the latter year it seems to have been about 15.6 percent of GDP. Show Less -

The Brazilian economy in the post-war period has undergone more profound transformations in structure as well as policies than most other developing countries. Most... Show More + of the 'fifties were characterized by stagnating exports, rapid import substitution and in the second half of the decade the large special stimulus provided by the building of Brasilia. The combination of these factors resulted in a relatively rapid expansion of domestic production together with an annual inflation which until 1959 varied between 14 and 26 percent. Thereafter it accelerated steadily, reaching more than 100 percent in the early months of 1964. During the next few years it should be possible for Brazil to resume economic growth while at the same time achieving substantial further reductions in the rate of price inflation. After having achieved an average annual growth rate of 6 percent between 1950 and 1962, gross domestic product (GDP) on average expanded by 3.3 percent annually in the next 4 years. It seems reasonable to expect an average growth of about 5.5 percent between 1966 and 1971; industrial production which in the period of rapid expansion had grown at more than 9 percent annually, should resume its leading role and increase by at least 7 percent per year while agriculture may well grow by some 5 percent annually, i.e., fractionally more than in the past. Output growth of this general order is likely to require a continuation of the past trend in investment: gross domestic capital formation grew at annual average rates of 9 percent between 19.50 and 1962 and of 10 percent between 1962 and 1966; in the latter year it seems to have been about 15.6 percent of GDP. Show Less -

For the purpose of these statistics, external public debt includes all debt payable to creditors outside the debtor country in foreign currency, goods or services, with... Show More + an original maturity of one year or more, which is an obligation of the national government, a political subdivision, or an agency of either, or an autonomous public body. It also includes external private debt guaranteed by the national government, a political subdivision or any agency of either, or an autonomous public body, and incurred by debtors located within the debtor country. Tables provide the following information: debts outstanding as of a specified date, usually December 31, 1961. Certain debts incurred after this date are also shown. Service payments for the years 1962 through 1971 shown in the tables are the estimated amortization and interest payments due in foreign currencies, goods, or services on the debts summarized. Show Less -