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To: Baba 2 who wrote (24733)	12/21/1998 10:33:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116955

IMF says Brazil economic outlook has deteriorated 11:22 a.m. Dec 21, 1998 Eastern By Anthony Boadle WASHINGTON, Dec 21 (Reuters) - The IMF said on Monday it had revised its growth forecasts for Brazil, forecasting Latin America's largest economy would shrink by 1.0 percent next year as its outlook had deteriorated significantly. In an update of its World Economic Outlook, the International Monetary Fund also revised down the growth projection for Brazil this year to 0.5 percent from 1.5 percent three months ago. IMF Chief Economist Michael Mussa said the -1 percent figure for next year was the basis for the economic programme agreed with Brazil last month and may be revised when the programme is reviewed in February. Private analysts have already cut their 1999 forecasts for Brazil to -2 percent, he noted. ''It would not surprise me to see a downward revision when we revisit our forecast in a couple of months,'' Mussa said. ''But we are not anticipating that Brazil will fall into a deep recession,'' he told a news conferecne. The fund said the near-term growth prospects for most of Latin America have weakened due to the severe impact the financial crisis in emerging markets has had on Brazil. While the spillover effects from the Russian crisis on other major Latin American economies has been less severe, the region is now expected to grow 2.5 percent in 1998, down from 2.8 percent in the IMF's previous outlook in October, and 1.5 percent in 1999, compared an earlier forecast of 2.7 percent. The IMF revised upwards its 1998 growth forecast for Argentina to 5.2 percent from 5.0 percent, but said Argentine economic growth should slow to 3.0 percent in 1999. The fund also revised its forecast for Mexico up slightly to 4.6 percent and said the Mexican economy should expand by 3.0 percent next year. Chile's projected growth for 1999 has been revised to 2.0 percent from 3.0 percent, reflecting a tougher external financial environment and the tightening of macroeconomic policies in recent months, the fund said. Venezuela's economy will contract by 2.5 percent this year due to the fall in world oil prices and production levels. But the IMF revised upward projected oil production, and the economy is no longer forecast to decline further in 1999, but to grow by 0.1 percent. Peru is expected to grow faster than any other major economy in the region next year, at 6.0 percent. The IMF warned that considerable downside risks remain for Latin America's outlook, despite the apparent easing of pressures on financial markets. The revised growth projections are based on the assumption that access to international capital will improve, which may not necessarily be the case. Export markets could also turn out to be weaker than expected, the IMF said. A sharper slowdown in North America would hurt Mexico, in particular, because exports account for one quarter of its economic output. The report said the easing of world monetary conditions had helped restore calm in financial markets, but it warned that, while the danger of global recession seems to have receded, conditions of financial markets remain ''fragile.'' In the flight to quality by investors during this year's global financial crisis, Latin American nations were seen as the most vulnerable to an interruption in external finance. Action by Brazil to deal with its chronic fiscal deficit and the large IMF-led financial support package agreed to by the intentional community in mid-November forestalled a crisis that would have spread to other emerging markets, the IMF said. Copyright 1998 Reuters Limited.