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Weekly Report - 2 December 2003

Tracking trends...

BRAZIL | Growth outlook worsens. Economic growth forecasts in Brazil are about to be revised downwards in the light of the poor performance revealed by third-quarter figures. In July-September the economy grew by a mere 0.4%, which, while inching the country out of recession, left GDP at the end of the first nine months 0.3% lower than in the same period of last year. What growth there was in QIII resulted mainly from industry expanding by 2.7%, and exports by 0.8%, only just offsetting a decline of 6.7% in agriculture (the only sector significantly above last year in the first nine months).

Current official growth forecasts range from 0.4% (finance ministry) to 0.8% (planning ministry), with the central bank venturing 0.5% — already set to be the lowest in four years. Central bank president Henrique Meirelles believes the economy could grow by at least 3% next year, but says that in order to maintain that rhythm (low in terms of what is needed to create jobs and roll back poverty), Brazil will have to improve its infrastructure.

ARGENTINA | Growth outlook improves. Economy minister Roberto Lavagna says he has been pleasantly surprised by evidence that the Argentine economy will grow this year by 7.3%. He does not expect this rate to be maintained: next year's budget has been calculated on a GDP growth assumption of 4%. `Argentina,' Lavagna said last week, `will be all right in four years' time. No matter how much we may want to shorten the timespan, it won't happen earlier.'

CHILE | Jobless rate shrinks. In August-October Chile's open unemployment rate inched downwards by 0.6 points, to 8.8% — the lowest level for this quarter in the last five years. Labour minister Ricardo Solari says this means the year could end with a rate lower than the projected 8.5%; at least two well-known private economists are expecting it to reach between 7.1% and 7.3% at year-end.  

Finance minister Nicolás Eyzaguirre, however, is projecting a rate of about 8% for the end of next year: he says the only way to bring it down more is with higher economic growth.

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