▁a ▁m ild ▁re cess ion ▁at ▁this ▁point , ▁conditions ▁w ors ened ▁substantial ly ▁after ▁the ▁de valu ation ▁of ▁the ▁Mexican ▁pes o ▁during ▁December ▁ 1 9 9 4 . ▁The ▁economy ▁sh rank ▁by ▁ 4 %, ▁and ▁a ▁dozen ▁banks ▁col lapsed . ▁With ▁the ▁labour ▁force ▁continu ing ▁to ▁expand ▁and ▁employ ment ▁falling ▁sharp ly ▁along ▁with ▁aggregate ▁demand , ▁un emp loyment ▁rose ▁by ▁over ▁ 6 % ▁in ▁ 6 ▁months . ▁But ▁the ▁government ▁respond ed ▁effectively : ▁it ▁tight ened ▁bank ▁reg ulation ▁and ▁capital ▁requirements , ▁and ▁encourag ed ▁foreign ▁banks ▁to ▁take ▁over ▁we aker ▁local ▁ones . ▁The ▁economy ▁soon ▁recovered ▁and , ▁between ▁ 1 9 9 6 ▁and ▁ 1 9 9 8 , ▁both ▁output ▁and ▁employ ment ▁grew ▁rapidly ▁and ▁un emp loyment ▁decl ined ▁substantial ly . ▁However , ▁at ▁the ▁beginning ▁of ▁ 1 9 9 9 , ▁the ▁Brazil ian ▁currency ▁under w ent ▁a ▁strong ▁dep reci ation . ▁The ▁Argent ine ▁economy ▁contract ed ▁ 4 % ▁in ▁ 1 9 9 9 , ▁and ▁un emp loyment ▁increased ▁again . ▁ ▁Ex ports ▁grew ▁from ▁$ 1 2 ▁billion ▁in ▁ 1 9 9 1 ▁to ▁$ 2 7 ▁billion ▁in ▁ 2 0 0 1 , ▁but ▁many ▁indust ries ▁could ▁not ▁comp ete ▁abroad , ▁especially ▁after ▁Brazil ' s ▁de valu ation . ▁The ▁strong , ▁fixed ▁exchange ▁rate ▁turned ▁the ▁trade ▁balance ▁to ▁a