Rio, August 14, 2003 (Agência Brasil - ABr) - The lowering of interest rates decided at the last two meetings of the Copom (Monetary Policy Committee) and the availability of nearly R$ 8 billion, as a result of the reduction in the compulsory reserve requirement, improved the outlook of the commercial sector for the rest of the semester. This is the opinion of the president of the Commercial Federation of the State of Rio de Janeiro (Fecomércio-RJ), Orlando Diniz.

In his view, nevertheless, the figures show that the situation has "deteriorated to such an extent" that only further cuts in interest rates could permit the sector to end the year with real earnings at the same levels as those registered in 2002, "which itself was not a very good year," he emphasized. "We at the Fecomércio-RJ are hopeful about the next meeting of the Copom, next week, and we trust that the numbers that show that inflation is under control and that the real sector of the economy is up to its neck in recession will move those who are in charge of formulating monetary policy to be more aggressive in lowering interest rates," he concluded.

For Paulo Brück, coordinator of Research at the Fecomércio, the government's recent decisions to lower interest rates should begin to bring consumers back, gradually, to the stores, since these decisions reduce the pressure exerted by debts that are in the process of being repaid.

Brück said that the Fecomércio still has no way to measure this reversal of expectations on the part of consumers, but he recalls, for example, the reheating of the automobile sector, following the government's decision to reduce the value levied by the Industrialized Products Tax (IPI).

"A new drop in interest rates at the Copom's meeting next week may even encourage merchants to blow the dust off projects that the monetary squeeze, the fall in the salary mass, and the rise in inflation - followed by an even greater drop in consumption - led them to file at the back of their cabinets. By resuming investments in the real economy, the entrepreneur will be generating jobs and expanding the salary mass," Brück affirmed. He also pointed out that payment of the first installment of the 13th salary and the sealing of some collective labor agreements that recuperate salary losses inflicted by the rise in inflation contribute to improving the outlook.

The comments by Fecomércio's directors were made after the data for July were released, pointing to a 5.57% earnings drop in the commercial sector of Rio de Janeiro. This was the seventh consecutive negative result.

With July's results, the commercial sector ended the first seven months of 2003 with a cumulative result of -6.97%. The annualized cumulative rate for the last 12 months was -4.35%.

In July, the negative standout was the automobile sector, in which the decline amounted to 14.07%, in comparison with July, 2002. The only group that presented a positive result was non-durable goods (an increase of 0.90% over July, 2002). The supermarket and megamarket branch belongs to this group. (DAS)