SAO PAULO, BRAZIL—Brazil's plastics processing industry faces an uncertain 1998, due to local and global financial problems.
Some markets, including automotive and appliances, suffered this fall after Brazil's government doubled interest rates and raised taxes to avoid currency speculation. But the processing sector still expects 4-5 percent growth in 1998, said Ronald Caputo, executive director for Abiplast, the Brazilian plastics industry association.
``These are preliminary figures for the sector as a whole. It is possible that the packaging and construction segments [will] post higher growth rates than this, while other segments such as the automotive and electronics industries still present an unpredictable future,'' Caputo said.
In 1997, the local commodity resins processing business totaled US$8.1 billion vs. US$7.3 billion a year ago. Resin consumption increased to 6.8 billion pounds vs. 6.1 billion pounds in 1996.
According to analysts, recovery in the automotive and electronics industries will depend on a gradual reduction in interest rates, which already is under way.
Roberto Macedo, executive director at Eletros, a trade association for the electronics and appliance industries, said if interest rates drop to normal levels by March, those industries should recover in the second quarter and 1998 sales volume will equal 1997.
However, 1997 was not a stellar year — the group estimates that unit sales in the sector slipped slightly more than 12 percent and revenue slid 23 percent from 1996.
Preliminary information from Anfavea, the national association of vehicle manufacturers, shows that Brazil's vehicle production in 1997 reached a record level of 2.07 million automobiles, up from 1.8 million in 1996. But production still fell short of the 2.1 million the group forecasted just a few months ago.
In November, vehicle production and sales fell 32.5 percent and 33.69 percent, respectively, compared with October figures.
Anfavea expects production to fall 25 percent in the January-February 1998 period, but still expects to hit total 1998 production of 2.5 million units.
In the macroeconomic scenario, analysts predict 1.5 percent growth for Brazil in 1998 and 4 percent inflation, down from 4.6 percent inflation in 1997.