business plan for 2004 - EDP

MACROECONOMIC FRAMEWORK
>> 1 Global Economy
A number of events occurred in 2003, that affected the
existing favourable economic forecasts, particularly the
war in Iraq, the performance of the stock markets and the
difficulties experienced by the leading European
economies in regaining greater economic growth. The
Acute Respiratory Syndrome epidemic that affected
several Asian countries in particular also had negative
economic consequences worldwide.
As expected, 2002 was used by the leading global
economies to attempt to counteract the economic
slowdown seen in particular following the September 11
attacks. According to the IMF, the global economy grew
by 3.0% in 2002, underpinned particularly by the
performance of the North American economy and of
several Asian economies, given the still weak
performance of the European Union and of the Japanese
economy, and of the instability seen in several countries
of Latin America.
GDP at Constant Prices
2.8%
2.0%
1.7%
1.6%
1.6%
1.4% 1.5%
0.9%
2.3%
1.5%
0.4%
2001 2002 2003
Portugal Spain Euro Area Brazil
The end of some of the factors that upset the global
economy in 2003, particularly the quick end to the Middle
East conflict, brought some confidence for to the economy
and, according to the latest IMF forecasts, the global
economic growth in 2003 stood at 3.2%, slightly higher than
the figure achieved in 2002.
As predicted at the end of 2002, the decline of oil
production in Venezuela caused by the general strike that
marked the beginning of the year in that country and the
initial apprehension as to the duration and consequences
of the likely military conflict in Iraq led to an increase of
oil prices during the early months of 2003, though the
prices of this raw material fell later in the first half.
Trading prices were generally between 25 and 30 dollars
during the second half of the year.
To encourage the upturn of economic growth without any
great inflationary pressures the downward trend of
interest rates seen at the end of 2000 was heightened. The
historic lows seen in 2002 fell even further, with the
European Central Bank fixing its refinance rate at 2.0%,
0.75 percentage points less than in 2002, while the North
American Fed Funds rate was fixed at 1.0%, 0.25
percentage points less than the previous year.
Benchmark Interest Rates
25.40% 26.30% 26.30% 26.30% 26.30% 25.80%
24.30%
21.80%
19.80%
19.80%
17.30% 16.30%
2.75% 2.75% 2.50% 2.50% 2.50% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
1.25% 1.25% 1.25% 1.25% 1.25% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-07 Oct-03 Nov-03 Dec-03
BCE FED Brazil (Selic)