Brazil consumer confidence falls for 3rd straight month in July

Reuters, 07/25/2012

(Reuters) – Consumer confidence in Brazil fell for the third consecutive month in July, as Brazilians grew increasingly dissatisfied with current economic conditions and less optimistic about the near future.

Brazil’s consumer confidence index fell to 121.6 in July from 123.5 in the prior month after seasonal adjustments, private research institute Fundação Getúlio Vargas said on Wednesday. The index’s three-month moving average edged down from the previous report.

The survey’s barometer of current economic conditions fell to 135.4 from 139.1 in June, and the gauge of consumer expectations for the next six months slipped to a four-month low of 112.7 from 117.1, FGV said in a report.

Week in Review 07/20/2012

Each Friday, through the Brazil Portal feature “The Week in Review”, the Brazil Institute will highlight Brazil’s news topics in one concise summary.

The economic and investment climate in Brazil continued to feature prominently in this week’s headlines. One of the most puzzling facts for Brazilian economic analysts is that the nation’s consumer confidence remains high, despite the multitude of downward revisions for projected annual growth. Notwithstanding the flagging currency, nose-diving stock market and the decline of the nation’s ETF (exchange-traded fund), Brazil’s population still seems happy to spend. However, not all the news is so grim: successful projections for Brazil’s commodities such as coffee and sugar, which have seen a recent upswing, are tempering the pessimism.  Additionally, many international investors hope to capitalize on consumer spending; companies like Land Rover are expanding operations in Brazil. However, even this consumer spending is no golden ticket; the economic slowdown has some foreign investors rolling back production and threatening layoffs, often inciting anger or even massive strikes like the one seen at the GM Factory last Monday.

Oil was another major topic dominating Brazilian headlines, both from economic and environmental perspectives. On the environmental side are recent developments in the Chevron oil spill case: the ANP, Brazil’s petroleum regulation agency, reported that the fine against Chevron will not likely exceed 25 million. Chevron claims that they are not at fault, however, the ANP claims that the leak could have been prevented. Preemptive ties were drawn between the spill and the mysterious case of dead penguins washing up on the shores of Rio Grande do Sul, however it has recently been discovered that the penguins died of natural causes. On the economic side, Brazil’s Petrobras is hoping that raising oil prices will help their recent sales slump; the majority-state-owned company was proclaimed the worst performing major oil stock this year. Other oil companies, such as Norwegian owned Statoil, have seen more success in tapping Brazil’s sizable offshore resources.

In other news, rising rates of violence in the country have drawn the attention of the press. Geraldo Alckmin, governor of São Paulo state, attributes rising violence in his region to drug trafficking. Whatever the cause, studies have shown that violence is on the rise and is especially affecting youth; a recent study shows that Brazil has one of the highest youth homicide rates in the world.

Brazil: distinctly bipolar

Samantha Pearson – The Financial Times (blog), 07/18/2012

After Brazil’s disastrous retail sales data last week, no wonder that some have started to question the country’s supposed “two-speed” model of growth.

If the consumer boom is now faltering as well as headline growth, perhaps Brazil is simply destined to be a “no-speed” economy instead? However two studies this week have suggested that Brazil continues to be distinctly bipolar.

On Monday, Grant Thornton’s International Business Report showed that confidence among Brazil’s business community is plunging. In the first three months of the year, Brazilians were ranked as the second-most optimistic in the world about the course of their own economy over the next twelve months. However, by the second quarter, they had already fallen to eighth place (Peru came first).

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What slowdown? Brazil consumer confidence rises again

Brian Winter – Reuters, 06/18/2012

SAO PAULO, July 17 (Reuters) – Brazil’s economy has barely grown since the middle of last year. But somebody apparently forgot to tell the Brazilians.

A measure of consumer confidence rose in June to its second-highest level in more than a year, reflecting widespread optimism over the Brazilian economy and individuals’ own job prospects going forward.

The study published by the government-linked IPEA economic analysis firm on Tuesday laid bare one of the most curious aspects of Brazil’s economy this year: No matter how much politicians and executives gripe about stagnant growth, most people on the street are still in a surprisingly cheery mood.

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Brazil Retail Sales Fall Most Since 2008 as Shoppers Pinched

David Biller – Bloomberg, 07/11/2012

Brazil’s retail sales fell in May by the most in more than three years, as indebted consumers failed to respond to government measures to spur demand. Yields on interest-rate futures fell.

The volume of sales declined 0.8 percent, down from a revised 0.7 percent increase in April, the national statistics agency said today in Rio de Janeiro. The fall was the biggest since November 2008 and surprised all 38 economists surveyed by Bloomberg, whose median estimate was for a rise of 0.6 percent.

President Dilma Rousseff’s government has granted tax breaks for goods including furniture, appliances and automobiles to prop up demand and achieve its latest 2012 growth forecast of 2.5 percent. The May retail sales data opens room for the central bank to further cut borrowing costs today and at future meetings, said Flavio Serrano, senior economist at Banco Espirito Santo de Investimento SA.

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Week in Review, 07/06/2012

Each Friday, through the Brazil Portal feature “The Week in Review”, the Brazil Institute will highlight Brazil’s news topics in one concise summary.

News this week continued to revolve around Brazil’s continued measures to stimulate the economy. With a falling trade surplus and factory output on the decline, the government has been eager to recoup their losses, accelerate production, and encourage consumer spending. Cuts to steep oil taxes are being discussed to reinvigorate ethanol production, as well as tax cuts on common household goods aimed at increasing stagnating sales. Some of these stimulus measures have seen results; car sales have jumped markedly after a similar tax cut, although auto output itself has not rebounded. However, the results of similar stimuli, such as the monumental new agricultural loan program announced this week, have yet to be seen.

In hemispheric news, Brazil’s ties to its Latin American neighbors have been both tested and strengthened this week. On the one hand, regional tensions have been high since the expulsion of Paraguay from Mercosur after last week’s demi-coup/impeachment that ousted Fernando Lugo. Though Brazil was one of the many nations that criticized the impeachment proceedings  and questioned their constitutionality, the country also stands to benefit. Given that the coup led to Paraguay’s removal from Mercosur, lawmakers in Asunción can no longer block Venezuela’s entrance into the trade union, a development which could potentially profit Brazil greatly. Outside of South America, Brazil and Mexico are strengthening their relationship, as Mexico’s newly elected President vowed to ally with the South American giant.

The case pitting Brazilian laborers against corporate giants BASF and Shell Oil has also seen some development this week. Investigations into workers’ claims that they were exposed to harmful pesticides are ongoing. The workers’ victory seemed ensured when a judge mandated that Shell and BASF put aside 328 million for their compensation, however this measure was blocked later in the week by a different judge.

July 1 marked the 18th anniversary of the Plano Real, the landmark fiscal legislation that introduced the real as Brazil’s currency. O Estado de S.Paulo interviewed Persio Arida, a former Wilson Center Public Policy Scholar and one of the men responsible for the plan’s design and implementation, about the plan’s success almost two decades later.

Brazil auto output dips in June despite sales jump

Alberto Alerigi and Brad Haynes – Reuters, 07/05/2012

SAO PAULO, July 5 (Reuters) – Automobile production in Brazil slipped in June despite a sharp jump in sales, as carmakers took advantage of tax breaks to draw down inventories but remained cautious about restarting idle production lines.

Auto output dipped 2.6 percent while sales jumped 22.9 percent in June from May, automakers association Anfavea said on Thursday.

In the first half of the year, production of new cars, trucks and buses fell more than 9 percent from a year earlier, as rising loan defaults and tighter lending choked demand in the Brazilian market that was booming just a year ago.

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Brazil’s start-up baby boom

Vinod Sreeharsha – The New York Times, 06/28/2012

SAO PAULO — There is something of a baby boom going on in Brazil’s burgeoning e-commerce sector.

Sao Paulo-based Baby has secured $16.7 million in additional financing to grow its online baby and maternal product business.

Accel Partners led the round, which was stretched out over several months. Tiger Global also participated in what for them was a follow-on investment in the company.

While these two firms closed in February, additional investors Valor Capital Group, Menlo Ventures, Greenoaks Capital, and Chamath Palihapitiya joined the round’s final phase, which closed last week. Mr. Palihapitiya also invested in the company’s initial round.

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HTC pulls out of Brazil

Jenny Hsu and Aries Poon – The Wall Street Journal, 06/23/2012

TAIPEI—HTC Corp. 2498.TW -2.91% said Saturday it is closing its office in São Paulo, which mainly oversaw sales and distribution in Latin America, as the Taiwanese smartphone maker faces growing headwinds amid intensifying competition from rivals at different price points.

Analysts said HTC’s pullout of Brazil is in line with the company’s strategy of focusing on other emerging markets such as China and India, where the mid- to high-price customer segments—HTC’s primary markets—have more room for growth and where the Taiwanese brand is better known.

Brazil is one of the world’s fastest-growing smartphone markets, driven by a wide range of low-cost devices, considerable handset subsidies from network operators and dominance of prepaid packages that cost consumers a lot less than postpaid deals.

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PepsiCo targets north-east Brazil

Joe Leahy – The Financial Times, 06/18/2012

PepsiCo’s foods division is looking to double its revenue in the next three to four years in Brazil in spite of a recent slowdown in Latin America’s largest economy.

PepsiCo’s plan reflects the belief of many local groups and multinationals that the longer term structural source of economic growth in Brazil, the rise of its lower-middle class, especially in the traditionally poorer northeast, is intact.

“We have been doubling our business in [the richer south of] Brazil every five years and in the northeast every three years,” said Olivier Weber, PepsiCo’s president of South America, Caribbean and Central America foods.

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