August 25, 2014
Brad Haynes and Silvio Cascione – Chicago Tribune, 8/22/2014
Many of Brazil’s biggest retailers, homebuilders and carmakers are cutting jobs as Latin America’s largest economy teeters on the edge of recession, a fresh blow to President Dilma Rousseff’s re-election bid.
For years, low unemployment was key to Brazil’s emergence as an economic power and important gains in the fight against poverty.
The unemployment rate remains near record lows of around 5 percent and the leftist Rousseff regularly touts it as a success of the ruling Workers’ Party over the last 12 years.
August 22, 2014
Silvio Cascione and Luciana Otoni – Reuters, 8/22/2014
Brazil posted a current account deficit of $6.018 billion in July, central bank data showed on Friday, growing more than expected from the month before.
The country had been expected to post a deficit of $5.8 billion, according to the median forecast of 15 analysts in a Reuters poll. Brazil’s current account deficit in June was $3.345 billion.
Foreign direct investment in Latin America’s largest economy was $5.898 billion in July, above market expectations of $5.4 billion.
August 21, 2014
Kenneth Rapoza – Forbes, 8/20/2014
Brazil’s Central Bank injected another $12 billion into the economy on Wednesday following analyst projections that this year’s GDP will print at just 0.79%.
This is the second time the Central Bank has provided some form of stimulus to lenders. In July, it provided around $21 billion to banks to induce lending.
Brazilian equities have been on a tear lately no matter what the economic fundamentals suggest. The iSharesMSCI Brazil (EWZ) exchange traded fund is up 6.07% in the past five days, clobbering the benchmark MSCI Emerging Markets index by roughly 500 basis points.
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.
August 20, 2014
Kenneth Rapoza – Forbes, 8/19/2014
Brazil is more than samba and soccer. But the airplanes it makes and the soybeans it grows are coming under increasing cost pressures, making a number of manufacturers there lose ground to competitors in the U.S.
A new study by the Boston Consulting Group (BCG), made public on Tuesday, said that Brazil was one of a handful of 25 major exporters that was losing its competitive edge to other countries in the Americas. In this case, the U.S. and Mexico are often beating Brazil to the punch.
“Improving the productivity of each worker is becoming an increasingly important factor in manufacturing competitiveness across the globe,” said Michael Zinser, a BCG partner. “This is especially true as the once-considerable wage gaps between developed and developing economies continue to shrink.”
August 19, 2014
Paulo Trevisani – The Wall Street Journal, 8/19/2014
True to its habit of offering a steady flow of rosy economic forecasts, the Brazilian government is expecting the second half of 2014 will be better than the first, a top official said Monday.
Brazil’s economy expanded by a meager 0.2% in the first quarter of this year compared with the previous quarter. Second-quarter results aren’t out yet, but analysts expect them to be about as bleak.
That’s disappointing for officials hoping the economy would grow faster this year than the modest 2.5% pace clocked in 2013. In the central bank’s latest weekly survey of about 100 private-sector economists released Monday, the group projected gross domestic product would rise 0.79% this year, down from its prior forecast of 0.81%.