Brazilian Real Crisis

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Brazilian Real Crisis
Jonathon HardyMarc SteiningLucas Valderrama
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Economic Growth
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Trade Balance

• Deficits start in 1997
• Near crisis, the deficit widens and during crisis
  reach their peak
• After crisis, Real devalues and exports start to
  increase which lead to the current surplus

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Trade Balance
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International Reserves

• Before the crisis, Brazil needed large reserves
  to maintain the peg
• After 1998, reserves decrease drastically and
  stay low for a few years
• Since crisis, reserves have increased because of
  the trade surplus.

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International Reserves
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Political Events

• Asian crisis
• Russian crisis
• Long-Term Capital Management crisis
• Elections

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Inflation Effect

• Until the leadership of Fernando Cardoso, the
  Brazilian economy was both lethargic and racked
  by a hyperinflation that exceeded 1000 percent in
  1994.
• Cardoso introduced the Real Plan
• This brought the inflation rate down to less than
  5.
• However, the Cardoso program, which included a
  gradual devaluation of the real against the
  dollar, was not enough to avoid another crisis
  when international speculators as well as
  Brazilians began to sell the Brazilian currency.

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