Brazil’s automotive industry trade association – ANFAVEA – has downgraded its 2002 vehicle sales forecast, saying that it expects all vehicle sales in Brazil to decline by around 6% to 1.5 million units. Previously the industry association had forecast growth of around 3% to a level around 1.65 million units.

The downward revision reflects Brazil’s sluggish economic performance this year, in part connected with region-wide concerns following the collapse of the Argentine economy.

The Brazilian economy has also been adversely affected by political uncertainties related to the Presidential election due in October.

In comments reported by Reuters, Anfavea President Ricardo Carvalho told a news conference: “I’m rooting for a cut in interest rates. With a cut, the expectation is the scenario would improve.”

Analysts note that Brazil’s economy and automotive market are still holding up and have at least not followed Argentina’s precipitous decline this year. They also say that when the Presidential election has been resolved, the economy could be ready for a shot in the arm with an interest rate cut.

ANFAVEA’s prognosis on production is more optimistic, with exports projected to be strong. The 2002 vehicle production forecast has been revised down by 5%, but is still forecast to match 2001’s 1.8 million vehicles.

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