Brazil’s Mantega says opposition win could wreck economy

August 29, 2014

Alonso Soto – Reuters, 8/28/2014

Brazil’s finance minister waded into the country’s presidential campaign on Thursday, warning that an opposition victory in the October election could push the economy into recession and undo a decade of social gains under the ruling Workers’ Party.

The comments by Guido Mantega, which the opposition and some analysts criticized as unbecoming of a sitting finance minister, came on the eve of the release of official data that is expected to show that Brazil, Latin America’s largest economy, is already in recession.

Brazil’s once high-flying economy has slowed sharply in the last four years under President Dilma Rousseff, complicating her chances for re-election in October. Growth is now at a crawl, inflation is running high, and business confidence has evaporated, discouraging investment.

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Brazil enters recession in pre-election blow to Rousseff

August 29, 2014

Brian Winter – Reuters, 8/29/2014

Brazil suffered a recession in the first half of the year as investment plunged and the country’s hosting of the World Cup suffocated economic activity, a major blow to President Dilma Rousseff’s already diminishing hopes for reelection in October.

Latin America’s largest economy has suffered stagnant growth for more than three years under Rousseff’s left-leaning policies, which have dented consumer and business confidence and caused heavy losses for financial investors.

The economy took an even bigger downturn in the second quarter, contracting 0.6 percent from the first quarter, according to government statistics agency IBGE. The agency also revised down its estimate for first quarter activity to a 0.2 percent contraction, meaning the economy entered a recession.

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Silva Melds Dishwasher Past With Growth Vows for Brazil Vote

August 25, 2014

Raymond Colitt – Bloomberg, 8/25/2014

Forty years ago, Marina Silva was a maid washing dishes in the jungle city of Rio Branco. Today, she is a presidential contender, counting on her personal history to appeal to poorer Brazilians even as she adopts economic positions friendly to business leaders and investors.

Silva’s entry into the contest as a replacement for Eduardo Campos after he died in a plane crash has upended the race, with polls showing her attracting previously undecided voters. To win, she needs to do more: siphon support from President Dilma Rousseff among the poor, who have benefited from 12 years of social welfare under the ruling Workers’ Party.

Silva’s pledges to slow inflation, grant central bank autonomy and undo fiscal policies that led to a sovereign credit downgrade target a different audience: supporters of Senator Aecio Neves, who appeals mostly to more affluent Brazilians. Her personal background positions her to meld this economic-growth agenda with an appeal to poorer voters, said Rafael Cortez, a political analyst at research company Tendencias Consultoria Integrada.

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Brazil Eases Credit Rules to Inject $4.5 Billion in Economy

August 20, 2014

Matthew Malinowski and Karen Eeuwens – Bloomberg, 8/20/2014

Brazil’s central bank has eased rules on reserve requirement for a second time this quarter in a bid to boost credit in a slowing economy.

The bank published the rules in today’s Official Gazette, altering rules for payments on non-cash deposits. The changes will channel about 10 billion reais ($4.5 billion) into credit, the bank said in a statement published on its website. The move follows the bank’s decision in July to free up 30 billion reais, according to the statement.

President Dilma Rousseff’s administration is struggling to contain above-target inflation without causing growth to deteriorate further. The central bank has kept the benchmark interest-rate at the highest level since 2012, after lifting the key rate by 375 basis points in the year through April. The moves haven’t improved the economic outlook, according to analysts surveyed by the central bank, who forecast growth will slow and inflation will accelerate this year compared to last year.

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Brazil’s Neves vows to reduce inflation to target center

August 12, 2014

Reuters, 8/12/2014

Brazilian opposition candidate Aecio Neves said on Monday that if elected president he would adopt policies aimed at bringing the inflation rate back to the center of an official target range of 4.5 percent by the end of the four-year presidency.

President Dilma Rousseff’s management of the economy has come under heavy criticism ahead of the election on Oct. 5, but while leading opinion polls show Neves narrowing the gap they still point toward a victory for the incumbent.

Neves said in an interview with GloboNews TV that he would do what is necessary to keep prices in check. The centrist senator also said that he would also seek to lower the target range for inflation.

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Exclusive: Brazil may raise fuel prices by up to 6 percent

August 12, 2014

Luciana Otoni – Reuters, 8/11/2014

The Brazilian government could increase domestic fuel prices at refineries by up to 6 percent after the October presidential election, a senior government source told Reuters on Monday.

The official, who asked not to be named because of the sensitivity of the issue, said an increase of between 5.5 percent and 6 percent is a preliminary calculation and aims to help state-run oil company Petroleo Brasileiro (PETR4.SA), known as Petrobras.

President Dilma Rousseff, who is running for re-election on Oct. 5, has kept fuel prices below international levels to curb above-target inflation. That policy has hurt the finances of Petrobras, which is forced to buy fuel at international prices and sell it more cheaply in the local market.

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Brazil Ex-Insider Returns to Help Oust President

August 11, 2014

Luciana Magalhaes – The Wall Street Journal, 8/8/2014

With slow growth and high inflation hurting Brazilian President Dilma Rousseff’s chances of winning a second term, a financial heavyweight has joined the opposition to persuade voters that Brazil needs a new economic steward.

Arminio Fraga, a former central banker, has been advising Aecio Neves of the Brazilian Social Democracy Party for several months. He’s now talking openly of returning to government, perhaps as finance minister, if Mr. Neves can pull of an upset in October’s presidential elections.

“I wouldn’t make myself available if I didn’t feel deeply bothered, and I am,” Mr. Fraga, 57, said last week in an interview in his office in Rio de Janeiro.

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