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Zusammenfassung in portugiesischer Sprache
Description:
We present projections of the trade and current account balances for Brazil in the period 2001/03. We show that external deficits shall persist during this period; given an international environment characterized by decreasing capital flows (especially those directed to emerging economies), this may impose considerable restrictions on domestic growth. We then discuss possible external adjustment strategies and their implications for domestic activity. The adjustment strategy could be based either on exchange rate devaluation or on additional investments in productive capacity. However, there are limits to both strategies, and we conclude that the evolution of the Brazilian economy during 2001/03 will depend on its ability to walk on the razor's edge given by the exchange rate/investment relationship.