Telebras (TBH) & Brazil Message Board

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Strategies & Market Trends : Telebras (TBH) & Brazil

TBH 0.404

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To: DMaA who wrote (9755)	11/17/1998 6:41:00 PM
From: Steve Fancy	Read Replies (1) of 22640

Year 6 - No 65 - october/98 by Unibanco Irrespective of the negotiations surrounding Brasília's fiscal package, one thing is for certain: Brazil's GDP this year will show a modest growth of between 0.5% and 0.8% and will shrink by between 1% and 2% next year, dragged down mainly by lower industry output. The hardest fall will probably come in the second quarter of 1999, when industry will bottom out at 7% below of what it turned out a year earlier. We expect recovery in the last quarter. Retail sales in the last quarter will be slack and will not leave much inventory to replenish after the holiday season is finished. High interest rates and rising unemployment will ensure that delinquency remains frequent. The recession, however, will probably generate blessings in disguise. The pressure on the current account should ease thanks to lower imports, dividends remittances and spending by Brazilian tourists abroad. Part of the dividends sent out in the last 90 days were originally meant for 1999. This hurts the figures for this year but should improve them for next year. Notwithstanding the upcoming September current account statistics, we do not expect this deficit to worsen this year compared with last. Indeed, next year the current account deficit should improve thanks to a narrower trade deficit, less overseas travel spending and fewer dividend remittances, largely due to a slower economy. Debt paper buybacks by Brazilian companies will reduce Brazil's net interest expenses next year. On the other hand, lower reserves mean less income from investment of this cash.

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