MercoPress. South Atlantic News Agency

Recession threatens Brazil

Brazil that since 1999 following the Russian financial crisis, had a spectacular comeback is now threatened by recession because of the constant depreciation of its currency and the US war drums.

Before September 11th., when the bombings in United States, the market value for the dollar was 2,60 Reales, but now it has jumped to 2,90 and prospects are that it will continue. President Fernando Cardoso and Economy Minister Pedro Malán had forecasted 2001 was going to be a spectacular year, just in time for the 2002 presidential elections. However, Brazil's energy crisis and political turmoil weakened Mr. Cardoso's leadership and now the bombings in New York and Washington have made the Sao Paulo stock exchange collapse between 25 and 30%, while the Real has experienced a 45% depreciation since the beginning of 2001. Depreciation of the Brazilian currency for the whole of 2001 was expected to be in line with an inflationary target of 6%, now reaching 10%. "It's a very delicate moment, and recession is round the corner", said Central Bank president Gustavo Franco. Brazil recently received a 15 billion US dollar stand IMF loan, and although its international reserves stand at 35,6 billion US dollars, economists fear that in the current situation they could become dangerously close to 25 billion, when all the alarms will start ringing