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Strategies & Market Trends : Argentine stocks -- Ignore unavailable to you. Want to Upgrade?

To: Tom who wrote (158)	11/9/1998 2:13:00 AM
From: Tom	Read Replies (2) \| Respond to of 331

Mixed forecasts for Argentina's economy.... Buenos Aires Herald Economic growth: mixed forecasts The economy will start to expand early next year and the government's forecast of 4.8 percent growth over the whole of 1999 should be achieved, Economy Minister Roque Fernandez said on Wednesday. Spending cuts and tax increases in Brazil are expected to lead to a decline in interest rates there, resulting in a rebound in the economy of Argentina's biggest trading partner. "We should start to feel a recovery in the first four months (of 1999)," Fernandez told reporters. Economic problems in Brazil and an increase in interest rates in most developing countries have prompted many economists to cut their 1999 growth projections for Argentina. Deutsche Bank AG, for instance, has reduced its estimate to three percent from 4.5 percent. Economic activity has slowed in the past few months as declining demand in Brazil and rising interest rates caused manufacturers to rein in production. (Watch what happens when the big layoffs begin the first of the year. - ty) Automakers, such as the local units of Ford, Fiat and Volkswagen, have been among the most affected, along with steelmakers and foods companies. Fernandez said that even if economic growth was unchanged in the third and fourth quarters, compared with the same 1997 periods, this year's economic growth would be "slightly over 5 percent." The government's latest official growth forecast was 5.3 percent. The country's economy grew by 7.1 percent in the first half of this year, while in the whole of 1997 growth was 8.6 percent. Despite Fernandez's forecasts of a rebound in the Brazilian economy, New York-based brokerage Morgan Stanley Dean Witter & Co. forecast that Brazil's economy will contract by 7.5 percent in the first quarter of 1999 as it plunges into recession. Morgan Stanley predicted that Brazil's economy will contract by two percent for the whole year after shrinking four percent in the final quarter of 1998. The recovery will be slow, with growth at one percent in 2000. The faltering Brazilian economy will yank down neighboring Argentina's economy with it, Morgan Stanley said. The brokerage has revised its 1999 GDP growth forecast for Argentina to two percent from a previous 4.5 percent as demand in Brazil for Argentine products drops.