Brazil gets real

But that's a currency, not a state of hard-headedness

Twenty years ago today, on July 1st 1994, Brazil adopted a new currency. The introduction of the real proved to be a turning-point in the fight against inflation. This is the leader article that The Economist published that week

THE start of a new month has brought Brazil a new currency, the real: the third step in its plan to stabilise prices. Not before time. It is 12 years—and several earlier plans—since Brazilians saw average annual inflation dip below 100%. This year prices have been rising by about 45% a month. Can the new plan, devised by Fernando Henrique Cardoso, lately finance minister and now a presidential candidate, do better?

Even now, many Brazilians will respond with a shrug. They have learned to live with inflation. Most people—though not the poorest, whose only savings are in their own pockets—have been shielded by the indexation of almost everything. The well-off have held dollars abroad. Nor have soaring prices killed the economy: it grew by 5% last year. Yet that was a high point. In three years out of the...Continue reading



from Americas view http://ift.tt/1z5phKx