Brazilian Crisis 1998-1999.ppt

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1、Brazilian Crisis 1998/1999,Brazil vs. Asia,Current Account of 4%GDP vs. 8% for Thailand Fixed Peg vs. Crawling Peg (Slow Currency Depreciation 8% p.a.) Privatization and FDI were expected to cover more than 30% of CA deficit Strong Foreign Investment Pattern (95-US$5B; 96-US$13B; 97-US$16B) Politica

2、l Stability Controlled Credit Expansion (Below 30% of GDP),What went wrong?,Two Main Factors Adverse Price Shock between Jan-97 and Jan-99 Exported Products Prices fell 16% International Credit Restrictions Russian Crisis August/98,The Brazilian Strategy assumed that the Country would have time to d

3、o the necessary adjustments, while the rest of the world financed the current account deficit.,Crisis Cronology,Deterioration of Primary Results (Interest not Included) Increase in Public Debt,Budget Deficit,Debt Evolution (% of GDP),Crisis Cronology,Increase in CA Deficit as a % of GDP Increase in

4、financial needs,Current Account Deficit,Trade Balance,Financial System,Crisis Cronology,Political Issues Itamar Franco (former President and current Governor of Minas Gerais) announced a default on the State Debt.International Agents fly out of the country,Unemployment Rate,Interest Rate,Interest Rate,International Reserves,Foreign Exchange Rate,Stock Exchange Bovespa,Stock Exchange Bovespa,GDP Growth,GDP US$,Inflation Rate,Monetary Base,Gross Capital Formation,National Accounts,