US Bank Morgan Stanley Warns Brazil Growth Might Be Close to Zero

Downtown São Paulo, Brazil Brazil's economy could suffer a contraction during two consecutive quarters at the end of 2008 and beginning of 2009, thus suffering a "technical recession" according to a report form Morgan Stanley released in New York.

The US investment bank is the first to mention the possibility of a recession in Latinamerica's largest economy. However it expects Brazil to expand 2% in 2009, but warns that negative external circumstances could torpedo that prospect.

"We can't discard a percentage close to zero", said Marcello Carvalho, Morgan Stanley economist, which could then be considered a "technical recession in the coming quarters".

"The big debate the coming six months is going to be whether it's recession or not and how to get out of that situation, said Carvalho. He explained that the recent economic expansion of Brazil could be attributed to lower interest rates backed on a strong currency which helped moderate inflation.

But since the beginning of the year the local currency real has lost over 20% of its value to the US dollar because investors are dumping their assets in emerging economies to cover losses in other places.

Confirming the statement for the sixth month running foreign investors pulled money from Brazil's stock exchange in November reflecting global aversion to risk in emerging markets, according to Sao Paulo analysts.

Investors sold the equivalent of US$ 481 million more than they bought in stocks last month, BM&Bovespa SA said in a statement posted on its website. That brings the total for 2008 to the equivalent of US$ 10.5 billion.

The 66-stock Bovespa Index, which gets about half its value from producers of energy and raw materials, fell for a sixth month in November, sliding 1.8% for its longest streak since 1995.

Commodity stocks including state-controlled oil company Petrobras and second-biggest steelmaker Usinas Siderúrgicas de Minas Gerais led the decline as oil and metals prices dropped.

Mercopress

Tags:

You May Also Like

US Counts on Paraguay to Tame Brazil and Argentina

Two soccer teams played for a spot in the semifinal of the Copa Libertadores ...

Brazil’s Petrobras Invests Heavy in the US and Argentina

Petrobras, Brazil’s government owned oil company is exploring in waters 1,000 meters deep south ...

Brazil Loses 4.5 Million Tons of Soybeans to Rust

Brazil’s Ministry of Agriculture, Livestock, and Supply’s Department of Plant Health and Inspection is evaluating ...

Brazil Issues Half a Billion Dollars in Bonds in US and EU

The issuing of Global bonds in the European and United States market, announced this ...

Brazil’s Sí£o Sebastií£o Port Makes History Shipping Cars to Mexico

Tomorrow, November 9, 4,540 cars produced by General Motors at their factory in São ...

Kahal Zur Israel synagogue in Recife, state of Pernambuco, Brazil

Those Intrepid Brazilian Jews! They Started the NY Jewish Community in 1654

If one were to ask most Americans to describe the images and ethnic qualities ...

The Land of the Sphinx Is Luring Brazilian Soccer Players

Rogério Dantas, a 23-year-old native of the southeastern Brazilian state of São Paulo, arrived ...

LETTERS

For all its self-congratulatory slaps on the back, the Brazilian marketeering establishment is not ...

Brazilian Companies Hire Under the Table to Avoid Paying Taxes and Benefits

Most of the Brazil’s legally constituted companies continue to agglomerate in major urban centers, ...

Brazil Learns About Prison Alternatives in the UK

Brazil’s Minister of Justice, Márcio Thomaz Bastos, said that the cooperation agreement with the ...