FT: Brazil to experience substantial contraction
Aug/31/98 at 12h10 pm ET
Sao Paulo, 31 - In its session "Americas", the England-based newspaper Financial
Times pointed out JP Morgan's forecasts that Brazil "will experience a substantial
contraction" next year because of the turmoil in world financial markets. According to
the bank, the newspaper said, the country's economy is to register a contraction of
2% in 1999.
Differing from the overall consensus in the private sector, which foresees a growth of
3.1%, the institution claimed that tougher external financial conditions, combined with
slower global growth and strong US dollar, "would hamper economic activity in Latin
America's largest economy". The Bank had previously been predicting the Brazilian
economy would grow 2% by next year.
"Global financing conditions have changed dramatically," the bank's chief economist in
Brazil, Marcelo Carvalho, said. "In the medium term, Brazil cannot count on getting
all the external financing it needs."
The newspaper stressed that Brazil external financing requirements for 1999 -- the
current account deficit plus debt amortizations -- "is US$40bn to US$50bn". It went
further saying tha the "pessimist outlook comes at a time of growing concern among
economists about Brazil's ability to meet heavy external financing requirement next
year". (By Regina Cardeal and Paulo Monteiro)
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