• Categories
  • Archives

US Analyst Forecasts Doom for Brazil’s Economy

Economic growth in Brazil will fall toward two percent in 2005 says Jeph Gundzik, president of Condor Advisers, an investment risk analysis company based in Mammoth Lakes, California.

Gundzik’s latest research on Brazil begins by describing how the results of recent municipal elections have increased political risk. 


“The local elections were a boon for the opposition PSDB.  They were also good for Lula’s main coalition partner the PMDB.  The result is a stronger opposition and weaker coalition.” 


According to Gundzik, high political risk will be one of several factors weighing on Brazil’s economy in 2005.


The research continues with an analysis of economic growth risk.


“Contracting investment over the past several years has undermined the economy’s long-term growth potential.  This is appearing now as strained manufacturing capacity, infrastructure bottlenecks and rising inflation. 


“To maintain any credibility Brazil’s central bank will have to push interest rates much higher over the next six months.  Economic growth risk is high as a result,” Gundzik says.


Gundzik details how this year’s strong private consumption growth cannot be maintained while inflation and interest rates are increasing. 


“Private consumption is being fueled by credit growth.  It’s unlikely that consumer credit demand will continue to grow as interest rates increase,” he says.


The research also describes the factors expected to push fiscal risk higher next year. 


“Fiscal risk is misunderstood by investors because the accepted measures of fiscal risk are extremely misleading.  For example, 40 percent of the government’s domestic debt must be rolled over in 2005, adding to upward pressure on interest rates.”


According to Gundzik, economic weakness will undermine the exchange rate. In addition, increasing foreign debt amortization next year will prompt a $10 billion reduction in Brazil’s foreign exchange reserves.  “The real will depreciate in 2005,” he predicts.


Condor’s research has foreseen, according to the company, all the major emerging markets crises in the last 10 years including Brazil’s exchange rate devaluation in 1999 and Argentina’s default and devaluation in 2001. 


www.condoradvisers.com


PRNewswire

Tags:

  • Show Comments (1)

  • Guest

    Carlos Barbosa
    I am no economist but I can sympathize with you. Maybe you are right, I hope you aren’t.

    Yes, I do believe the USA is not a friend of Brazil, they are snakes with a poison bite just waiting to poison the Brazilian economy so that Brazil ‘The Sleeping Giant’ doesn’t wake up to the USA because if it does the USA will be in for a a ride of it’s life..

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Kenya and Brazil Have Been Finding Ways to Improve Bilateral Relations

Brazil wants to strengthen its political and commercial ties with Kenya. The Kenyan chancellor, ...

Brazil Seeks International Pacts to Fight Corruption

By the end of 2006, the Brazilian government intends to negotiate and sign judicial ...

Sugar cane plantation in blossom

In Brazil Fuel Grows in Trees. And the Google Boys Seem Ready to Plant Some.

George Bush, a former oil business-man, told the American people that the new goal ...

Brazilian Market Getting US$ 12 Billion Injection to Deal with Crisis

The global financial crisis sparkled by the US mortgage debacle has prompted the Central ...

At OAS Bush Calls for Free Trade and Brazil for End to Subsidies

U.S. President George W. Bush told the 35th OAS General Assembly underway in Fort ...

Chacrinha and Sílvio Santos: Two Key Names to Understand Brazilians’ Psyche

A huge percentage of the Brazilian population spends Sundays in front of the TV ...

Will the US Ever Comply with the WTO? Brazil Wants to Know.

The United States has still not complied with a World Trade Organization ruling that ...

Brazil Goes to Washington to Fix Its Social Security

Brazil’s Minister of Social Security, Amir Lando, initiated, yesterday, a series of contacts to ...

New Jobs Way Down in Brazil

In May, a total of 212,450 jobs in Brazil’s formal market were created, reports ...

Arabs Replace US and Argentina by Brazil as Main Soy Supplier

In April, Brazil posted revenues of US$ 26.1 million from exports of soybean to ...