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Weekly Report - 7 October 2003

Tracking trends...

ARGENTINA | Growth prospects. Headlines in Buenos Aires proclaimed that economy minister Roberto Lavagna had forecast for this year a growth rate of 6.3% to 6.5%. What he had actually said was that at present the economy was growing at that speed, and that investment was expanding at a rate of 30%. Lavagna had said days ago that growth might exceed 5.5%; in the first half of the year the rate of expansion was 6.6%, but it was decelerating towards the end of that period.

Export expansion has also been tailing off, with year-on-year growth at 16% for the first eight months of the year, 6% for August - while imports, still low in historic terms, were continuing upwards, with 42% accumulated growth so far this year, 48% in August. The balance: an 8-month surplus of US$11.42bn.

BRAZIL | Lowering expectations. The central bank has lowered its growth forecast for this year from a range of 1.5-1.8% to about 0.6%. At the same time it has lowered the inflation forecast from 10.2% to 8.9%. Last year Brazil's GDP grew by 1.52%, a smidgen less than in 2001. The industrialists are expecting for this year a growth rate of 0.74% and inflation of 9.65%. The bank expects the driving force behind this year's growth to be the agricultural sector, which is seen as expanding by 5.8%.

BRAZIL | Trade hits records. Export earnings in September reached US$7.28bn, a monthly record, which contributed to a trade surplus of US$2.67bn. This was the second-highest on record, after that of August, thanks to the fact that exports continued to grow fast. The balance for the first nine months was a surplus of US$17.8bn, another record.

CHILE | Unemployment seen shrinking. The government expects the average unemployment rate to fall from the 8.5% predicted for this year as a whole to 7% in 2004 and 6% in 2005. These are the assumptions being used to allocate funds for unemployment insurance payouts.

PARAGUAY | Debt repayments back on track. President Nicanor Duarte reports that fiscal revenues in September reached a record Gs369bn (US$59.5m), which has allowed Paraguay to meet current debt-service obligations - though, he admits, it is still carrying some `historic' arrears. The higher inflow will also allow payment on time of pensions.

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