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Non-Tech : Banco Industrial Colombiano ADR NYSE:CIB -- Ignore unavailable to you. Want to Upgrade?

To: Arnold Layne who wrote (31)	4/8/1998 1:25:00 PM
From: Arnold Layne	Read Replies (1) \| Respond to of 72

OECD Economic Forecast for Colombia and South America: (but thearrows are mine) MEXICO CITY, April 8 (Reuters) - South America faces a marked slowdown in economic growth in 1998 after the spillover from Asian financial turmoil forced up interest rates and rattled investors' nerves late last year, the OECD said on Wednesday. In its half-yearly world economic outlook, the Organisation for Economic Co-operation and Development said the positive effect of lower growth would be a narrowing in the region's current account deficit to $50 billion in total. "Given available information on economic activity since the financial turmoil of late 1997 and plausible hypotheses on the international economic situation, South America is poised for a marked deceleration of growth in 1998," the OECD said. It added there could be a "mild recession" in the region's industrial powerhouse, Brazil, in the first half of the year. South America has no members in the 29-nation organisation -- Mexico is its only Latin American member -- but the OECD sometimes publishes special reports on the region. The OECD said South America's current account gap would probably continue to be financed by long-term investment, lured by privatisation mainly in Brazil, Colombia and Venezuela, and by the continuing decline in inflation. "At this stage the major downside risk relates to the worsening of the Asian financial crisis. In that case, the determination of Brazilian authorities to defend their currency would be tested again," the report noted. Market turbulence in various Asian countries last year and resulting devaluations brought pressure to bear on Brazil's "Plano Real" economic stabilisation plan. Brazil's currency is widely regarded as overvalued as the country uses tight monetary policies to push down inflation. To defend the "real" currency against selling pressure, Brazil's central bank jacked up interest rates last October, and though they have since come down faster than markets expected, they remain at an annualised 28 percent. The OECD said abandoning the Plano Real would "shatter confidence in the whole region." Tightening fiscal and monetary policies, on the other hand, could lead to unemployment and social and political unrest. Argentina, the report said, suffered from the Asian fallout because international investors grew suspicious of currency board systems and the increasing cost of credit and lower Brazilian demand had slowed economic growth. It noted that bad news in Brazil would inevitably lead to "uncomfortably gloomy" prospects in its southern neighbour because of the interdependence of the two economies. For Argentina, the OECD forecast a 1998 growth rate of 4.0 percent, unchanged in 1999, after 7.0 percent in 1997. It said Brazil's economy should expand by a mere 1.0 percent this year and 3.0 percent in 1999. Brazil's economy grew 3.0 percent last year, the OECD said. The OECD said the prospects for other South American countries in 1998 were "moderately good." =====>> It said Venezuela started last year to recover from a 1996 recession while Colombia had rebounded from a mild slump. After growth of 7.1 percent in 1997, it forecast a 5.0 percent growth rate for Chile this year, slipping to 4.0 percent in 1999. =====>> The OECD saw growth of 4.0 percent in Colombia both this year and next after 2.8 percent in 1997. In Peru growth was seen at 4.0 percent and 5.0 percent in 1998 and 1999 respectively, compared with 7.0 percent last year. The organisation said Venezuelan economic growth would slow to 3.5 percent in 1998, followed by 4.5 percent next year after 5.0 percent in 1997. 11:34 04-08-98