Brazilian Congress overturns presidential veto

The New York Times – Associated Press, 03/07/2013

Brazil’s congress has overridden the presidential veto of part of a new law that gives a greater share of royalty revenues from the country’s vast oil fields to non-producing states.

The new law aims to share oil royalties more evenly among Brazil’s 27 states instead of favoring top oil producers such as the states of Rio de Janiero, Espirito Santo and Sao Paulo.

Congress approved the law late last year but President Dilma Rousseff vetoed the part that decreased the percentage of petroleum royalties going to producing states from 26.25 percent to 20 percent. Non-producing states that now receive 7 percent are to see their share increase to 21 percent.

Read more…

Global currency war could get nastier, warns Brazil’s Mantega

Alonso Soto and Luciana Otoni – Reuters, 02/08/2013

Brazilian Finance Minister Guido Mantega told Reuters European countries should focus on reviving their economies with more investments, rather than trying to weaken the euro to protects jobs as France has suggested ahead of next week’s meeting of G20 economic powers.

“We will continue to have this currency problem unless the global economy takes off,” Mantega said in an interview late Thursday. “The solution here is to make their economies more dynamic and jolt them out of stagnation.”

More than two years ago Mantega used the term “currency wars” to describe the series of competitive devaluations adopted by rich nations to bolster their exports amid the global slowdown to the detriment of emerging market nations.

Read more…

Brazil’s Real Surges as Central Bank Says Inflation Rate Is High

Blake Schmidt, Marisa Castellani – Bloomberg, 02/07/2013

Brazil’s real rallied the most among emerging-market currencies as the central bank said high inflation requires attention, spurring speculation that policy makers will let the currency strengthen to contain prices.

Swap rates climbed after the government reported that consumer prices increased in January at the fastest pace in almost eight years, adding to bets on a boost in borrowing costs. The exchange rate and tax cuts will help slow inflation, a central bank board member said in a phone interview, asking not to be identified because of internal policy.

“Higher inflation shoots the real up,” Joao Paulo de Gracia Correa, currency manager at Correparti Corretora, said in a phone interview from Curitiba, Brazil.

Read more…

Brazil’s Government Prods Top Banks to Help Ignite Economy

Rogerio Jelmayer – Fox Business/Dow Jones Newswires, 06/02/2013

An increase in lending is seen as essential if Brazil is to jump-start economic growth. While lending has more than doubled over the past 10 years, the pace of growth fell in 2012 and has been blamed, in part, for disappointing growth in 2012.

In 2012, lending by all banks increased 16.2% to a record of nearly 2.4 trillion Brazilian reais ($1.2 trillion). But that was the lowest expansion in years. By comparison, lending rose 19% in 2011 and 21% in 2010.

Brazilian gross domestic product expanded by only 2.7% in 2011 and by an estimated 1.0% last year. The consensus forecast for 2013 is better at 3.1% but still lags behind developing-country rivals China and India.

Read more…

Brazil Oil Giant Petrobras Blames Dollar For Collapse

Kenneth Rapoza – Forbes, 02/05/2013

Where’s is Glenn Beck‘s wacky George Soros/Petrobras conspiracy theory now? How about in the trash can, lit on fire, and burning to ashes. Brazil`s largest oil company has been an awful investment pick even for savvy Soros. And it’s not about to rise like a Phoenix from the ashes anytime soon.

Brazil’s Petrobras (PBR) is on its way to $16 a share and one of the reasons that the star of the economy has lost its shine is…the dollar. If you believe their corporate executives that is.

This has been the year that was for Petrobras’s relatively new CEO Maria Graça Foster. The market cap of Petrobras has shed billions since she took over from what many Petrobras watchers say is nothing more than a policy instrument for Brasilia to funnel money to pet projects, rather than an actual oil company drilling below sand and rock salt in the Atlantic Ocean.

Read more…

Brazil’s conundrum: the strong weak economy

Kenneth Rapoza – Forbes, 02/01/2013

If it makes any sense, Brazil`s  economy is the mirror opposite of the United States right now.  Unemployment in the U.S. is rising, and so is the market. The economy is slowly recovering from its worst financial crisis since the Great Depression.

In Brazil, unemployment is shrinking and the stock market is in decline. The economy that was supposed to grow over 4 percent in 2012, grew by maybe 1 percent. This year, it’ll probably grow by 2 percent.

Even as the economy remains weak, the currency is starting to strengthen, going from a weakness of over two to the dollar to around 1.99 Brazilian reals to the dollar on Friday.  It’s new trading rage, says Marcelo Salomon of Barclays Capital, is now 1.95 to 2.05 rather than 2.05 to 2.10.

Read more…

Worst drought in decades hits Brazil’s northeast

Caroline Stauffer – Reuters, 01/04/2013

Brazil’s Northeast is suffering its worst drought in decades, threatening hydro-power supplies in an area prone to blackouts and potentially slowing economic growth in one of the country’s emerging agricultural frontiers.

Lack of rain has hurt corn and cotton crops, left cattle and goats to starve to death in dry pastures and wiped some 30 percent off sugar cane production in the region responsible for 10 percent of Brazil’s cane output.

Thousands of subsistence farmers have seen their livelihoods wither away in recent months as animal carcasses lie abandoned in some areas that have seen almost no rain in two years.

Read more…

Latin America’s economies may grow 5.2% this year, led by Brazil, UN says

Randy Woods and Sebastian Boyd – Bloomberg, 07/21/2010

Latin America’s economies may expand 5.2 percent this year, led by 7.6 percent growth in Brazil, the United Nations’ economic unit for the region said.

The regional economy may expand 3.9 percent in 2011, the Santiago-based Economic Commission for Latin America and the Caribbean, known as Cepal for its initials in Spanish, said today. Economic output shrank 1.9 percent in 2009, it said.

Latin America will be one of the fastest-growing regions in the world this year, along with emerging markets in Asia, as programs to fight last year’s economic slowdown supplement supportive external factors such as Asian demand for the region’s metal and grain exports and easier access to credit, the commission said. The favorable backdrop may be short-lived and is unlikely to continue into next year, the unit said.

Read more…

Brazilian lessons for industrial policy

Tarun Khanna and Santiago Mingo- Project Syndicate, 05/10/2010

Few economic ideas are more lauded and reviled than that of industrial policy. Proponents, such as those who studied the rise of the East Asian economies, swear by it. Opponents see red at its very mention. The former point to economic development; the latter maintain that tens, even hundreds, of billions of dollars have been squandered.

One recent theatre of (dis)content is that of renewable fuels. Worldwide, $184 billion is being allocated in public stimulus investments to promote clean energy, led by the United States ($67 billion) and China ($47 billion). Of course, there is some progress—wind power meets 20 percent of the electricity demand in Denmark and about 15 percent in Spain and Portugal, for example—but the recipe for success remains elusive.

In this vein, Brazil’s experience at promoting renewable fuels, beginning in the 1970s, is directly relevant to today’s polarized views of industrial policy. A 10-year industrial policy program called Pro-álcool was crucial in the development of the industry. Today, Brazil is the world’s most competitive producer of renewable fuels, based primarily on bioethanol. Ethanol accounts for more than 50 percent of current light-vehicle fuel demand in the country, and Petrobras—Brazil’s energy giant and one of the largest companies in Latin America—expects this share to increase to more than 80 percent by 2020.

Read more…

Brazil’s economy adds jobs for 8th month in Sept

Reuters-10/14/09

* Brazil’s economy adds 252,617 payroll jobs in September

* Economy adds payroll jobs for 8th straight month

* Increase was largest so far in 2009 (Recasts, adds details, context)

BRASILIA, – Brazil’s economy added payroll jobs for the eighth straight month in September, the latest sign of an economic recovery that is prompting companies to hire workers to meet growing demand for manufactured goods and new homes, government data showed on Wednesday.

Read more…