After more than a decade's efforts, Brazil has successfully lifted its economy out of those dark days when it was crippled by hyperinflation, with clear signs showing the economic activity is undergoing fast recovery.

At the end of 1989, the inflation index in Brazil reached 50 percent a month, the peak of a hyperinflation nightmare for the South American country.

Brazilians had to rush to supermarkets and malls the day they received their salaries as the money would loose half of its purchase power as long as it was left home for a month.

Companies used to spend more time and efforts speculating in the capital market instead of investing the production sector.

Those days seem to be over.

In 1994, the government of then President Fernando Henrique Cardoso introduced the Real Plan, a set of measures designed to tame the hyperinflation phantom that had haunted the country since the 1960s. Despite some ups and downs, it succeeded in keeping the annual inflation rate at one digit.

President Luiz Inacio Lula da Silva, who was sworn in 2003, has managed not only to maintain the achievements of the past administration but done even better.

Analysts said the annual inflation in 2006 is expected to be less than 4 percent. If so, it will be under the government's target of 4.5 percent for 2006.

But a tempered inflation index is just one piece of the positive news. The current administration has almost won a struggle against another historical enemy, the country's foreign debt.

A principal part of the foreign debt and interest due in the coming years has been paid, leaving the future administration a once unthinkable comfortable position.

Lula raised federal taxes in 2003, although the move aroused some unpopular reaction. With more tax revenues and more exports income, the foreign debt situation is under control.

Meanwhile, a significant trade surplus has brought more U.S. dollars and euros into Brazil, and thus the local currency real has been greatly appreciated. One U.S. dollar used to be worth 3.52 reals on Jan. 2, 2003, and can only be changed into about 2.17 reals recently. The government has taken advantages of the favorable exchange rate to increase the country's reserves.

Following the development, several major international agencies have raised Brazil's credit grade which is now close to the dreamed investment grade.

The next challenge for the current administration is how to push the economy into a faster pace. The gross domestic product (GDP) growth in 2005 was only 2.3 percent, well below the average level of other emerging countries.

The slow GDP growth was explained by the country's high interest rates, a necessity to keep the inflation down.

However, realizing the negative effect of the high interest rates, the administration has slashed out them this year, bringing clear signs that the economic activity is recovering fast.

The country's industrial production witnessed a rise of 1.6 percent in May compared to April, up 4.8 percent compared to May 2005.

Based on recent inspiring figures of production and consumption, analysts here have estimated that Brazil's GDP is expected to grow as much as 4 percent for the whole year.

Source: Xinhua