Principal Factors
Brazilian and Global Economic Conditions
Growth rates in the Brazilian economy have risen considerably in recent years. GDP growth was 2.3% in 2005, 2.9% in 2006, 5.4% in 2007 and 5.1% in 2008, according to the IBGE. Although the Brazilian economy has shown positive growth trends in the past few years, the economy has recently been affected by factors that include:
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the global economic crisis since late 2007, which first affected our export sales and later affected our domestic market sales;
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the steady appreciation of the real against the U.S. dollar from 2004 through 2007, followed by the sharp 31.9% devaluation of the real against the U.S. dollar in 2008; and
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volatility in commodity prices and oil prices, exacerbated by the global economic crisis.
From 2003 to 2007, the devaluation of the U.S. dollar against other currencies and the conservative monetary and fiscal policies of the current government led to an appreciation of the real in relation to the U.S. dollar. The basic interest rate increased until June 2003, when the Central Bank began to decrease it, reaching 11.25% in April 2008.