Brazil: Walking The Tight Money Tightrope

Brazil's stop-and-go economy is set to slow again. As in most of Latin America, growth accelerated in 1996 after the Mexican-led recession of 1995. But because of Brazil's strong currency, rapid growth is drawing in imports, ballooning the trade deficit. The government's task in 1997 and 1998 will be to contain the trade gap by limiting domestic demand with tight monetary policy while continuing to implement spending reforms aimed at cutting the government deficit from 4.5% of gross domestic product.

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