Lessons from a Brazilian miracle: Surviving and thriving in a highly inflationary environment

Since the Plano Real was successfully implemented in July 1994, inflation has been curbed to normal proportions in Brazil. Until that moment, Brazil had been a highly inflationary economic environment for decades. It had reached a degree of sophistication by means of complex indexation mechanisms and a myriad of financial instruments that no other highly inflationary country had ever achieved. This article discusses the lessons that can be drawn from the pre-Plano Real period in Brazil. These lessons might prove useful in areas currently confronted with high inflation rates, such as Eastern Europe, and future highly inflationary countries. The article is based on a study among 40 senior executives from a wide variety of economic sectors in Brazil.