International Policy

Economic Spotlight Turns To Brazil

Analysts say investors are focusing their attention on Brazil, in the wake of the financial chaos in Russia. Although, like Russia, it has a yawning budget deficit, Brazil's economy differs from that of Russia in a number of aspects.

  • By far the largest market in Latin America, Brazil boasts the third largest emerging-stock market after Taiwan and South Africa.

  • Its gross domestic product is about double what Russia's was before it devalued its currency.

  • Brazil's stock-market capitalization was quadruple Russia's and about the size of the Mexican, Argentine and Chilean markets combined.

  • Brazil generates nearly one-third of all goods and services produced in Latin America.

Analysts say Brazil has been a victim of international investors' sudden fear of emerging markets. Last week, its shares were trading at an average of 4.5 times estimated 1999 earnings -- compared with seven times this year's earnings just a month earlier.

Source: Pamela Druckerman, "Brazil Takes Center Stage in Global Market Turmoil," Wall Street Journal, September 14, 1998.

 

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