Brazil's Economic Landscape: Multinational Companies' Presence

 omg the congress just flexed and approved a lit budget real quick, they're all about that equilibrium vibe. they're also talking about indexing prices and introducing a fresh currency that's gonna be pegged to the U.S. dollar. so boujee! (Roett, 2010:86) Monetary policy got all tight and there was, like, a total freeze of public sector prices (Clements, 1997). The plan was like totally implemented in July 1994 and like, it's been the most successful of its economic stabilization programs to like, end inflation. By like late 1996, inflation by some measures was, like, approaching an annual rate of less than 20 percent, which was, like, a total flex in this economy. 

The URV was like totally linked to the U.S. dollar on a one-to-one vibe.

 

Like, depending on how things are going, the URVs quotation in the local currency was like going up every day, you know? It was all tied to the exchange rate and stuff (Roett, 2010:87). OMG, inflation was like so low by 1998, it was down to less than 5 percent. Lit! GDP growth was lit, averaging 4 percent a year from 1994 to 1997, compared to being hella flat or going downhill in the previous five years, and investment climbed above 16 percent of GDP after being stuck for more than a decade (Roett, 2010:88). Some peeps saw the Real Plan as a way to "dollarize" the Brazilian economy, where prices and wages that used to be tied to inflation are now linked to a foreign currency. But like, Brazil and countries like Argentina had, like, totally different vibes when it came to their approach. Argentina was all about trying to keep their currencies stable by, like, officially linking them to the dollar. OMG, like the new currency totally flexed on the dollar after it was born. Lit AF! The design and implementation of the plan were totally different from the previous plans, fam. This may lowkey explain some of its mad success in its first years, ya know? It didn't rely on a basic price and wage freeze to stop inflation, unlike the previous plans. The de-indexation of the economy was like, totally the main vibe of the new plan and this was like, accomplished by converting salaries and a bunch of other prices in the months before the Real Plan was put into action into Real Value Units (URVs) (U.S Library of Congress- The Real Plan). 

OMG Brazil didn't even commit to that, and like, even though the real was pretty stable against the US dollar for, like, a year and a half, everyone was totally expecting it to eventually go down.

OMG, like the currency's gonna depreciate eventually, but for now, the exchange rate is stable and there's more money movin' between Brazil and the global markets, so the real is gettin' stronger and the interest rates are sky-high. Ouch! Lenders were like, "We need interest rates that will keep us safe in case things go south." And with prices being all over the place, borrowers couldn't pay back in money that was worth less because of inflation. (U.S Library of Congress- The Real Plan) The Real Plan was hella successful and got everyone hyped, which caused a major influx of cash flow to Brazil. This allowed the gov to keep its policy of like, keeping the exchange rate pretty stable. OMG, like so many $$$ flowed into Brazil, way more than covered the mad imports caused by the economy bouncing back, which caused a major boost in the country's foreign currency stash. Lit! The strong real caused a major drop in inflation and that led to some big changes in how money flows in the Brazilian economy, ya know? A big money scene was created after like so many years of inflation and it totally thrived because of the difference between borrowing and lending rates in a super high-inflation vibe. A bunch of finsta intermediaries got hella stressed when their revenue tanked, even with those lit interest rates. Also, income distribution in Brazil was totally shook by the drop in inflation. Lower-income peeps totally thrived thanks to the Real Plan, fam. This was like, cuz they had to deal with a big chunk of the inflation stuff since they didn't have as many chances to save money that keeps up with inflation, and also cuz the minimum wages and other pay didn't keep up with inflation. Sales of consumer durables, like, totally skyrocketed in the months after it was, like, implemented. This led the gov to try and flex on consumption and simp for saving in 1995 (U.S. Library of Congress: The Real Plan).

The Real Plan totally slayed in its early years, boosting major political vibes that the government needed to flex and fix the fiscal mess. 

The operational budget of the federal government in 1995 was like, way smaller than it had been in earlier years, ya know? OMG, like the country's public sector needs to chill and reduce the financial stress. It's all about the rates of the first year of the Real Plan, but also getting Congress to back up the fiscal reforms proposed by the Cardoso government. (U.S. Library of Congress: The Real Plan) #fingerscrossed The Real Plan was so lit that Cardoso had to peace out as finance minister. He straight up said he's gonna run for prez. The other top prez candidate was Luiz Inacio (Lula) da Silva, ya know? Lula and the Workers Party were like, "Yo, let's go hard on those social reforms and totally call out the Real Plan, fam." But like, the Real Plan was totally lit and all, but Lula and his squad were starting to be seen as old school instead of the next big thing (Roett, 2010:89). The election of Cardoso as prez in '95 was like a major turning point in Brazilian history, ya know? The plan's success totally gave Cardoso and his squad the chance to flex and go full send on a program to open up the economy to international trade and capital movements. No cap. He was also in, like, yeet.