March 10, 2014
Matthew Malinowski – Bloomberg, 3/10/2014
Brazil economists cut their 2014 key interest rate forecast for the second straight week, as 350 basis points in borrowing cost increases since last year threaten to undermine growth.
Brazil’s central bank will lift the benchmark Selic to 11 percent this year, compared with analysts’ estimates of 11.13 percent last week and 11.25 percent two weeks ago, according to the March 7 central bank survey of about 100 economists published today.
President Dilma Rousseff’s administration is combating prospects of faster inflation and slower growth. While the economy expanded more than analysts’ estimates in the fourth quarter, both consumer and industrial confidence remain low. The central bank on Feb. 26 halved the pace of key rate increases as factors including a weaker real pressure consumer prices even as demand remains uneven.
March 7, 2014
Merco Press, 3/7/2014
“Our proposal is to stimulate trade in local currencies through central banks” said Alberto Alzueta, chairman of the chamber. “The Brazilian exporter sells in reales and the Argentine buyer pays with Pesos, this will automatically increase trade and reduce demand for dollars”.
Likewise Jose Francisco Marcondes, president of the Brazil-Venezuela Federation of Chambers supports the initiative: “it is absolutely positive and adequate to organize this kind of trade which cuts us lose from the US dollar which we don’t issue and from inflation”.
The comments follow reports from Brazil’s main financial daily Valor Económico which estimates Brazilian exports to Argentina and Venezuela this year can be expected to drop by at least 4 billion dollars.
March 6, 2014
Matthew Malinwoski & Raymond Colitt – Bloomberg, 3/6/2014
Brazil’s central bank signaled today it will continue tightening monetary policy as above-target inflation remains persistent. Swap rates rose.
Policy makers led by bank President Alexandre Tombini voted unanimously on Feb. 26 to slow the pace of rate increases, raising the benchmark Selic rate to 10.75 percent from 10.5 percent after six straight half-point increases. The central bank’s monetary policy will help offset inflationary pressure from a currency depreciation, officials said in the minutes of their Feb. 25-26 meeting published online today.
The central bank considers “appropriate the continuation of the adjustment of monetary conditions under way,” according to the minutes. “Currency depreciation constitutes a source of inflationary pressure in the shorter term.”
March 3, 2014
Kenneth Rapoza – Forbes, 3/3/2014
Drought in the center-south and heavy rains in the center west bread basket states of Brazil have taken a massive toll on the country’s all-important farm sector. According to agribusiness analysts, the country will lose at least R$10 billion (around $4.35 billion) in farm revenues this year because of the odd weather patterns.
The smaller than expected crops, while not an entire disaster, has an impact on the country’s inflation. Brazil’s inflation rate is around 5.6% currently and any increase would force the Central Bank to rethink monetary policy.
Major cash crops such as coffee, soy, citrus, sugarcane and even beef cattle ranching have been impacted by the excessive weather. Brazil is the world’s largest producer of all of the above except for soybeans, in which Brazil is second to the U.S.
February 27, 2014
Matthew Cowley – The Wall Street Journal, 2/27/2014
Brazil’s economy accelerated in the fourth quarter of the year but growth remains fickle as key parts of the economy continue to sputter.
The growth suggests Latin America’s largest economy was in better shape than had been expected, after preliminary data from the Central Bank of Brazil had indicated that the economy may have flirted with a recession in the second half of the year.
Although the economy continues to underperform, signs of expansion may ease some of the gloominess that have made bankers and economists increasingly negative about the prospects for 2014.
February 27, 2014
Brian Winter – Reuters, 2/27/2014
Brazil’s economy ended 2013 on a positive note thanks to strong consumer spending and investment, providing a much-needed boost to President Dilma Rousseff as she tries to rebuild her credibility with investors and win reelection in October.
Gross domestic product expanded 0.7 percent in the fourth quarter compared to the third quarter, the government statistics institute said on Thursday. That was more than twice the amount expected by economists, and it pushed the economy to 2.3 percent growth on an annual basis for the full year of 2013.
Such growth is a far cry from the dynamic 4 to 5 percent annual levels often seen last decade, when Chinese demand for commodities helped make Brazil a star among emerging markets. Poor infrastructure, high consumer debt and sagging businessconfidence have brought Latin America’s biggest economy back to earth since then, prompting fears of a long period of stagnant growth ahead, possibly for years to come.
February 27, 2014
Paulo Trevisani – The Wall Street Journal, 2/26/2014
Brazil’s central bank raised its benchmark interest rate Wednesday to 10.75% from 10.5%, as expected, and appeared to leave the door open for more rate increases while slowing the pace of the hikes.
The move continues the bank’s yearlong fight against inflation even as rising interest rates and the poor performance of the country’s exporters jeopardize already feeble growth in an election year.
The statement accompanying the announcement was little changed from the previous statement, suggesting the bank is prepared to continue to raise the rate, known as the Selic, as necessary.
February 27, 2014
David Biller – Bloomberg, 2/27/2014
Brazil’s economy grew in the fourth quarter more than economists forecast as an increase in investment offset a drop in industrial production.
Brazil’s gross domestic product rose 0.7 percent in the fourth quarter from the prior three months after contracting 0.5 percent in the third quarter, the national statistics agency said today in Rio de Janeiro. That is above every forecast from 49 analysts surveyed by Bloomberg, whose median estimate was for 0.3 percent growth. Brazil’s GDP expanded 2.3 percent in 2013.
Today’s data will help boost lagging confidence in the world’s second-biggest emerging market, according to Jankiel Santos, chief economist at Banco Espirito Santo de Investimento. PresidentDilma Rousseff has overseen the slowest three-year growth period in a decade, with above-target inflation eroding consumer and business confidence. Policy makers led by central bank President Alexandre Tombini halved the pace of key rate increases yesterday as they work to tame inflation without further jeopardizing growth.
February 25, 2014
Blake Schmidt & Josue Leonel – Bloomberg, 2/25/2014
Brazil’s swap rates dropped for a fourth straight day on speculation that policy makers convening for a two-day meeting will limit increases in borrowing costs to a quarter-percentage point.
Swap rates on contracts due in January 2019 sank 12 basis points, or 0.12 percentage point, to 12.44 percent at 4:32 p.m. in Sao Paulo, the lowest since Nov. 22. The real depreciated less than 0.1 percent to 2.3431 per U.S. dollar.
Policy makers will raise the target lending rate by 25 basis points tomorrow to 10.75 percent, according to the median estimate of 59 economists surveyed by Bloomberg, after six straight increases of a half-percentage point. Brazil’s construction costs index rose 8 percent in February from a year earlier, the slowest pace since September, the Getulio Vargas Foundation reported.
February 24, 2014
Matthew Malinowski – Bloomberg, 2/24/2014
Brazil economists cut their 2014 economic growth forecast for the third straight week, as consumer confidence in the world’s second-largest emerging market plunges to the lowest level in nearly five years.
Brazil’s gross domestic product will expand 1.67 percent this year, compared with the previous week’s forecast of 1.79 percent, according to the Feb. 21 central bank survey of about 100 analysts published today. Economists also cut their 2015 growth estimate to 2 percent from 2.10 percent last week.
President Dilma Rousseff’s administration has been forced to shift economic policies, as stimulus measures and increased public spending last year fanned consumer prices without spurring growth. Officials on Feb. 20 said they would cut billions in spending to slow inflation and cut debt. Central bank President Alexandre Tombini said last week that boosting the benchmark rate by 325 basis points is working, and added that fourth quarter growth will be positive.