
Surpassed only by Bahia, Pernambuco possesses the second largest economy in the Northeast. The State has a PIB (Gross State Production) in the order of R$ 17 Billion, equivalent to the country of Chile, and greater than countries such as Paraguay and Uruguay. The State where the sugar cane based economy was the most expressive in Brazil; Pernambuco is passing through accelerated transformations. The economic composition of the State is based on agriculture, fishing, and industry.
In agriculture, the State is featured as the second greatest producer of sugar cane, with plantations concentrated in the Forest zone. Among the principal agricultural products cultivated in Pernambuco is found naturally colored perennial cotton, onions, manioc, corn, beans, and tomatoes. The Sao Francisco Valley currently exports fruits and wines of the highest quality. The area of irrigated agriculture is assisted by the infra-structure of the port at Petrolina along the banks of the Sao Francisco River.
Raising of livestock includes the breeding of beef and dairy cattle, pigs, goats, sheep and poultry. Milk production is concentrated in the rolling foothills, responding for more than half of the State production.
The service sector has been involving more people and generating more production. Commercial and financial activities correspond to 21% and 25% of the State Internal Product respectively. The industry of transformation also grew and responds for 25% of the Internal State Product. Diversification has been the great mark of the sector, with traditional items (textiles and foods), loosing importance in the value of the difference between the Gross costs of industrial production and the costs of industrial operations (Value of Industrial Transformation -VIT), going from nearly 60% down to 35% during the period from1960 to 1985 according to the Brazilian Institute for Geography and Statistics (IBGE). This diversification boosted the development of industries in the fields of chemistry, electrical material, communications, mechanics, metallurgy, plastics, beverages, clothing, and footwear.
The growth of industrial and commercial activities has been stimulating amplification and improvements at the ports of the region. In the 90´s, the triune constituted by the emerging activities of tourism, agricultural irrigation, and the Port Complex at Suape, project still more for the Pernambucan economy in the national scene. Another activity of note in the Pernambucan economy is in the area of arts and crafts. Cities such as Caruara (Foothills, 72 miles from the capital), have centers or fairs where the craftspeople are sought out by the tourists.
Recife serves as headquarters for the so-called "convention tourism" of great companies and institutions. Already a center for vacation tourism (Brazilian and foreign), Pernambuco is on the obligatory route for European tourists, principally Portuguese, Spanish and Germans. Olinda and Recife are the great highlights (Carnaval in these cities is world renowned), along with Porto de Galinhas (in Ipojuca), Gaibu and Calhetas (these last two beaches are in Cabo de Santo Agostinho, in the Recife Metro Region), Itamaracá (with the island of Coroa do Avião) and during the month of June at the San Joao festivities in the city of Caruaru. During Easter week, the movie set city of Nova Jerusalem, in the municipality of Brejo da Madre de Deus ( 100 miles from Recife), in the coastal mountain range, attracts visitors for what is considered the greatest open air show in the world - the presentation of the Passion of Christ. The unique volcanic island of Fernando de Noronha is also part of Pernambuco.
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