The New Development Bank: The start of a new economic consensus?

July 21, 2014

Erica Kliment – Brazil Institute, 7/21/2014

2014 BRICS Summit in Brazil

The leaders at the 2014 BRICS Summit in Brazil

Is the rest of the world ready for a new order upheld by developing nations? In 2010, when former President Luiz Inácio Lula da Silva invited then-President Mahmoud Ahmadinejad of Iran to the Itamaraty Palace in Brazil, the meeting was highly criticized by the Obama administration. Lula, who had seemed to enjoy international acclaim when dealing with regional politics, was then chastised when he had reached too far out of the western hemisphere. His response was that he was merely attempting to better situate Brazil on the global stage, yet could the criticism have come from the fact that larger power players did not believe Brazil was ready to graduate from the role of regional babysitter?

Four years later, with an unexpectedly successful World Cup under Brazil’s belt and planning on another fruitful mega-event in just two years, the Summer Olympics in Rio de Janeiro, the developed world seems slightly more willing to accept developing nations’ role in the international sphere. Individually, these nations’ global clout is diminishing with slowing economic growth rates, yet collectively, they have the potential to create a new platform upon which they and future developing nations can flourish. Towards the close of the most recent BRICS Summit, five of those countries reached an agreement that, depending on its success, could bring developing nations to the position they desire – the forefront of international affairs.

During the 2014 BRICS Summit in Fortaleza, the leaders of Brazil, Russia, India, China, and South Africa jointly created the New Development Bank, a multinational fund of $150 billion in capital to provide stability and finance infrastructure for the five developing nations involved in the negotiations as well as future emerging markets. It will be headquartered in Shanghai with its first president from India, on a five-year rotating schedule, and with Brazil taking chairmanship of the board. Read the rest of this entry »

Brazil eyeing Japan’s help in oil project: reports

July 21, 2014

AFP – The New Age, 7/21/2014

Brazil plans to use Japanese technology in building a floating structure and ships for its huge offshore oil development project, media reports said Sunday.

Japanese Prime Minister Shinzo Abe and Brazilian President Dilma Rousseff will announce the use of Japanese technology in building a so-called “logistics hub” for the project when they meet in Brazil on August 1, according to a draft of their joint statement, Kyodo news agency said.

The massive floating structure under consideration would be about 300 metres (984 feet) long and 100 metres wide, Kyodo said, citing government sources.

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Rio Olympics organizers can glean lessons from Brazil’s World Cup

July 21, 2014

Mimi Whitefield – Miami Herald, 7/19/2014

Brazil has barely said tchau to the World Cup, but it has no time for a breather. In two years, Rio de Janeiro will be throwing out a welcome mat to the world as host of the 2016 Summer Olympics.

Only three countries — the United States, the former West Germany and Mexico — have had such a short turnaround between hosting duties for the two biggest sports events on the planet. In the 1930s, however, both the United States and Germany hosted summer and winter Olympics in the same year.

Despite misgivings about everything from security to transportation to whether stadiums would be finished on time, Brazil managed to pull off a successful FIFA World Cup. That’s a positive omen for the Aug. 5-21, 2016 Olympics and Sept. 7-18 Paralympics.

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World Cup Hit Brazil’s Economy Hard

July 21, 2014

Paul Kiernan – The Wall Street Journal, 7/17/2014

Early indicators of Brazil’s economic performance during the World Cup period are starting to trickle in, and they aren’t pretty.

While the month-long tournament drew a million foreign tourists to Brazil–far exceeding official expectations–economists say its impact on other sectors of the economy was decidedly negative. Some World Cup host cities declared municipal holidays on days when matches were played in local stadiums, while untold legions of workers played hooky to watch the Brazilian national team’s seven games.

Brazil’s National Confederation of Industry, or CNI, said in a report Friday that its leading indicator of industrial production fell to the lowest level since 2010, when the survey began. Capacity utilization fell to 68%, the lowest level on record for any month, while “undesired” inventories soared.

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IMF congratulates BRICS for new fund, offers help

July 21, 2014

Alonso Soto – Reuters, 7/17/2014

The International Monetary Fund on Wednesday congratulated the five BRICS countries for creating a new reserves fund that intends to challenge Western dominance in the global lender.

The IMF’s managing director, Christine Lagarde, said the lender would like to work with the BRICS in the new fund, which pools together $100 billion in reserves from Brazil, Russia, India, China and South Africa.

BRICS leaders on Tuesday launched the fund and a joint bank of the same size in a bold step to press for a bigger say in the global financial order centered on the IMF and the World Bank.

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Brazil’s Longer-Term Swap Rates Decline as GDP Outlook Worsens

July 21, 2014

Filipe Pacheco – Bloomberg, 7/21/2014

Brazil’s longer-term swap rates fell as economists lowered their 2014 growth estimate to below 1 percent for the first time, adding to speculation policy makers will limit further increases in borrowing costs.

Swap rates on contracts maturing in January 2021 declined three basis points, or 0.03 percentage point, to 11.58 percent at 9:53 a.m in Sao Paulo, the lowest on a closing basis since Sept. 24. The real was little changed at 2.2257 per U.S. dollar.

Economists reduced their growth forecast to 0.97 percent from 1.05 percent a week earlier, according to the median of about 100 estimates in central bank survey published today. Policy makers held the target lending rate at 11 percent for a second straight meeting on July 16 after nine consecutive increases to curb accelerating inflation.

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Emerging-Market Equities Post Weekly Advance as Brazil Rallies

July 18, 2014

Julia Leite and Natasha Doff – Bloomberg Businessweek, 7/18/2014

Emerging-market stocks posted a weekly gain as oil producer Petroleo Brasileiro SA led a rally in Brazil on speculation a new president will revive growth in Latin America’s largest economy, offsetting declines in Russia.

The Ibovespa surged the most among the world’s biggest equity benchmarks as a poll showed President Dilma Rousseff’s lead narrowing in the October election. Chinese stocks rallied amid speculation more cities will loosen property curbs as home prices slump. The S&P BSE Sensex Index increased for a fourth day as Indian software stocks advanced. The Micex Index (INDEXCF) slid to a seven-week low in Moscow, with natural-gas producer OAO Gazprom posting its longest losing streak on record.

The iShares MSCI Emerging Markets ETF (EEM:US) increased 1.6 percent to $44.16, pushing its gain this week to 0.6 percent. The second-biggest exchange-traded fund that holds developing-country stocks sank 1.9 percent yesterday amid concern the shooting down of a Malaysian jet in Ukraine would escalate tensions in eastern Europe.

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Low corn prices favor new type of ethanol in Brazil

July 18, 2014

Reuters, 7/18/2014

Low corn prices in Brazil following a bumper crop are worrying farmers but providing favorable margins for an incipient corn-ethanol industry, said the manager of Usimat, the first Brazilian mill to produce the corn-based biofuel.

Usimat, located in a remote, corn-producing part of Mato Grosso state in central Brazil, plans to increase corn-based ethanol output to 100,000 tonnes this year from 67,000 tonnes last year.

Sergio Barbieri, the mill manager, currently is buying corn for 15 reais ($6.73) per bag, and says it is more profitable to use the grain than to buy sugarcane at up to 18 reais per bag.

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Suzlon to open Brazil factory

July 18, 2014
Andrew Lee – Recharge News, 7/18/2014
Indian wind turbine group Suzlon plans to open a factory in Brazil as it targets a share of the growing market there and in the wider Latin American region.

Suzlon aims to establish the plant over the next year and a half, but has not yet chosen a location and few further details were immediately available on the factory – its first in Latin America.

The decision by the Indian group to open a plant was confirmed by company representatives, and is a big vote of confidence in the regional market.

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Brazil expects export boost from World Cup

July 18, 2014

Joe Leahy – Financial Times, 7/14/2014

Brazil may have lost on the football field but in the VIP stands of the 2014 World Cup, Latin America’s biggest country triumphed, according to the head of the nation’s export agency, Apex.

The organisation helped Brazilian companies to invite more than 2,300 businesspeople from 104 countries to meet their local counterparts during the tournament, generating what it estimates was about $6bn in deals.

The foreign businesses invited ranged from technology and food companies to an enterprise involved in the equine industry that is keen to help export the Mangalarga Marchador, a breed of horse native to Brazil.

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