Brazil’s three-speed economy

Joe Leahy – Financial Times, 01/27/2012

Brazil’s economy is at another of those multi-speed moments that it is becoming known for.

Readers will recall that in 2010, the last year in office of President Luiz Inácio Lula da Silva, economists complained that Brazil had one foot on the brake and one on the accelerator. The foot on the brake was interest rates as the central bank ramped them up to try to keep inflation under control while the accelerator was, of course, fiscal spending as the outgoing president kept the budgetary pedal to the metal as his anointed successor, Dilma Rousseff, contested an election that year.

Now Brazil is in the strange position of having record low unemployment – 4.7 per cent in December compared with 5.2 per cent in November, even as its economy crawled along at near zero rates of growth in the third and fourth quarters.

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Brazilian businessmen are the third most optimistic in the world

Ricardo Geromel – Forbes, 01/27/2012

Grant Thornton International Business Report Optimism ranking. (Top 10) Source: Grant Thornton

According to the International Business Report (IBR) 2012 Grant Thornton International, 74% of Brazilian businessmen are optimistic about the Brazilian economy in 2012.

The Grant Thornton International Business Report (IBR) is a quarterly survey of business leaders from across the globe to measure global business confidence. Launched in 1992, the report is now in its 20th year. The research is carried out primarily by telephone interview lasting about 15 minutes with the exception of Japan (postal), Philippines and Armenia (face to face), mainland China and India (mixture of face-to-face and telephone). This personal approach hopes to avoid discrepancies due to cultural differences.

In 2011, Brazil’s GDP grew around 3%, the second worst performance since 2004 and one of the lowest in Latin America. Experts predict that in 2012 GDP growth will continue modest for emerging markets standards: between 3,5% and 4%. Nonetheless, the level of optimism among Brazilian businessmen about the Brazilian economy increased 24 percentage points over the last quarter. As a result, Brazil  assumed the third position in the global ranking; a huge improvement from the third quarter of 2011, when Brazil ranked 11th.

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Brazil exceeds central government primary surplus goal for 2011

Matthew Cowley – Dow Jones/WSJ, 01/27/2012

Brazil exceeded the goal for its central government accounts, the Treasury reported Friday.

The central government, which includes the Treasury, the social security system and the central bank, posted a 93.5 billion-Brazilian-real primary surplus for 2011, equivalent to 2.26% of gross domestic product. That was above the goal of a surplus of BRL91.8 billion.

The central government posted a BRL2 billion ($1.1 billion) primary budget surplus for December.

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Brazil’s illegal numbers game under pressure

Beth McLoughlin – BBC News, 01/27/2012

Jogo do bicho and Carnival have long been intertwined

The illegal gambling game in Brazil known as jogo do bicho, or the animal game, occupies an important, if shady, place in popular culture.

In the run-up to Carnival in February, Rio de Janeiro police have been targeting alleged gambling chiefs in an operation called Dedo de Deus, or Finger of God.

Standing for his police photo in Brazil’s regulation green prison uniform, Aniz Abraao David cut a forlorn figure.

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Race in Brazil: Affirming a divide

The Economist – from the print edition, 01/28/2012

The shadow of the past

IN APRIL 2010, as part of a scheme to beautify the rundown port near the centre of Rio de Janeiro for the 2016 Olympic games, workers were replacing the drainage system in a shabby square when they found some old cans. The city called in archaeologists, whose excavations unearthed the ruins of Valongo, once Brazil’s main landing stage for African slaves.

From 1811 to 1843 around 500,000 slaves arrived there, according to Tânia Andrade Lima, the head archaeologist. Valongo was a complex, including warehouses where slaves were sold and a cemetery. Hundreds of plastic bags, stored in shipping containers parked on a corner of the site, hold personal objects lost or hidden by the slaves, or taken from them. They include delicate bracelets and rings woven from vegetable fibre; lumps of amethyst and stones used in African worship; and cowrie shells, a common currency in Africa.

It is a poignant reminder of the scale and duration of the slave trade to Brazil. Of the 10.7m African slaves shipped across the Atlantic between the 16th and 19th centuries, 4.9m landed there. Fewer than 400,000 went to the United States. Brazil was the last country in the Americas to abolish slavery, in 1888.

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Rio de Janeiro buildings collapse captured on CCTV – video

Guardian, 01/27/2012

Footage from a security camera shows the moment when three buildings collapsed in central Rio de Janeiro on Wednesday. As the dust settles, the footage shows curious onlookers entering the area. Rescue workers have recovered six bodies from the wreckage. Six people were pulled alive from the rubble, but at least 16 are still missing

Watch video here

Brasília celebrates 25 years as World Heritage Site

Agencia Brasil, 01/26/2012

(01/04/2010) © UNESCO / Ron Van Oers

On December 7, 1987, Brasilia was named a World Heritage Site by the United Nations Organization for Education, Science and Culture – Unesco. Today there are 936 properties worldwide considered “great landmarks… the cultural or natural heritage of all mankind… having outstanding universal value.”

The government of the Distrito Federal, where Brasilia is located, has designated this year a celebration of the 25th anniversary of the event (“Ano da Valorização de Brasília como Patrimônio Cultural da Humanidade”). The principle objective will be to make the inhabitants of the federal capital aware of the need to protect and preserve the city’s monuments.

The Heritage Site of Brasilia is the largest in the world, covering 112.5 square kilometers. At the moment, the GDF (government of the Federal District) is renovating the Catetinho (a wooden building that was the resident of president Juscelino Kubitschek while Brasilia was being built) and building a monument (“Paneão da Pátria”), the last one designed by Oscar Niemeyer to be placed in the center of the city in the Praça dos Três Poderes.

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Foxconn gets Brazil tax breaks, looks to start iPad production

Mikey Campbell – Apple Insider, 01/25/2012

Foxconn's Jundiai, Brazil manufacturing plant. AppleInsider

The Brazilian government has approved tax reductions or exemptions pertaining to tablet production that will allow Apple manufacturing partner Foxconn to start iPad production in the country.

Brazil’s Inter-Ministerial Decree 34, which allows for a reduction or exemption from taxes for certain tablet computers, was signed on Monday and published in the country’s “Official Gazette” on Wednesday, clearing the way for Chinese manufacturer Foxconn to begin production (machine translation) of Apple’s iPad, reports Portuguese language newspaper Folha.

Specifically, the decree states that companies investing in the research and development of keyboardless touchscreen tablets weighing less than 750 grams qualify for IPI (Excise Tax), PIS (Social Contribution Tax) and CONFINS (Federal Contribution Tax) incentives. Also included under the decree are accessories, cables, power supplies and manuals associated with tablet computers.

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Brazil heading for U.S. style ‘free money’

Kenneth Rapoza – Forbes, 01/27/2012

COPOM minutes from the Central Bank show monetary authorities wanting to push interest rates to single digits. But to keep it at that level for long will require additional policies outside of the Central Bank's control. Forbes

With inflation over 5% and interest rates expected to fall below 10% this year, Brazil’s real interest rates are the lowest they have been in years. This is as close to U.S. style free money as Brazilians have ever seen, and those low rates just might stick around for a while, too.

Meeting minutes from Brazil’s Central Bank Monetary Policy Committee released Thursday had some traders saying that the comments were the most dovish they’ve ever read. Brazil’s monetary policy making authorities explicitly said that they are targeting single digit interest rates in Brazil. The benchmark Selic rate is now 10.5%.

For fixed income investors, the word on the Brazilian street is hold on to those long dated bonds because they are about to become a hell of a lot more valuable. Future local currency bond issues in Brazil are going to pay a lot less in interest than they have in several years.

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Rescue work continues in Rio

Laura Madden – Rio Times, 01/27/2012

Rescue work on the multiple building collapse near Rio de Janeiro's Municipal Theater continues, photo by FotoReporter/Vladimir Platonow/ABr.

The death toll in the multiple building collapseon Wednesday night in Rio de Janeiro’s Cinelândia area of Centro remains at six, according to the Medical-Legal Institute (IML). A Globo TV report early Friday morning lists the number of people missing at 27 in total.

On Thursday morning, the secretary of Rio de Janeiro state’s Civil Defense, Colonel Sérgio Simões confirmed in an interview with Rede Globo Television that the twenty-story building — one of the three that collapsed — was having construction work done on it.

“A survivor who was rescued was part of the construction job,” Simões told Rede Globo.

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