Brazil's War on Inflation Hurts US Firms
LONG a source of woes for United States banks, Brazil and its fierce campaign against inflation are hurting earnings of US manufacturers that do business there. Automobile makers and industrial-materials groups with signficant operations in Brazil are among the US corporations most affected by the policies of new President Fernando Collor de Mello.Skip to next paragraph
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The measures have forced down earnings at some companies as they put millions of dollars aside to cover problems in their Brazilian operations.
Mr. Collor took office March 15 and the next day froze more than $100 billion in bank accounts for 18 months. By starving Brazil of cash, he drove inflation down from a record monthly rate of 84 percent in March to zero in April, according to preliminary Brazilian government estimates.
Ford Motor Company was hard hit by the measures because the move created a severe liquidity crunch among Brazil's car buyers, virtually drying up demand.
Ford and General Motors Corporation halted Brazilian production, and Ford said last week its 1990 earnings might be affected.