Brazil bank lending dormant as new round of stimulus fails

September 26, 2014

Guillermo Parra-Bernal and Luciana Otoni – Reuters, 9/26/2014

Bank lending in Brazil slowed for a seventh straight month in August, another sign that recent measures to unlock personal credit failed to offset the impact of high borrowing costs and weak economic activity.

Outstanding loans in Brazil’s banking system rose 11.1 percent in the 12 months through August, the central bank said in a report published on Friday. According to Thomson Reuters calculations, the annual growth of bank loan books is running at the slowest pace since at least late 2003.

Lending rose 1 percent in August from the prior month, reaching 2.86 trillion reais ($1.18 trillion), the report said. Loans in arrears for 90 days or more, the industry’s benchmark gauge for credit delinquencies, remained stable at 5 percent of outstanding loans last month.

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Brazil’s young professionals look to emerging markets

September 23, 2014

Paulo Cabral – CCTV America, 09/22/2014

Brazil has become a destination for those who look for employment in emerging markets over the last a few years. A growing number of students and young professionals are moving to Brazil. CCTV America’S Paulo Cabral reports.

In one recent survey, 90 percent of the young professionals said they expected to work in at least three or four countries during their lives. Among the BRICS nations, Brazil, Russia, India, China and South Africa, Brazil was the preferred destination for 40 percent of the students.

The recession in Brazil hasn’t discouraged young professionals from coming here to build careers. Because of a shortage of skilled workers, the labor market remains tight and unemployment remains close to a record low of 4.9 percent.

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Brazil’s Economic Growth Forecast Reduced Again

September 8, 2014

Rogerio Jelmayer – The Wall Street Journal, 9/8/2014

Economists reduced once again their economic-expansion forecasts for Brazil for this year, after Latin America’s largest economy fell into a technical recession in the first half of the year, according to a weekly central-bank survey published Monday.

The survey’s 100 respondents reduced their estimates for economic growth this year to 0.48% from 0.52%, marking the 15th-consecutive reduction of the growth outlook for 2014. For next year, economists kept their estimates for an expansion of 1.10%.

Brazil’s gross domestic product shrank 0.6% in the second quarter from the previous three months, and first-quarter data was revised to a 0.2% contraction, according to the Brazilian Institute of Geography and Statistics, or IBGE, at the end of August. A conventional definition used by economists is that a recession is two consecutive quarterly declines in economic output.

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Better than Ukraine

September 5, 2014

The Economist (print edition), 9/6/2014

“We are not in a recession,” insisted Guido Mantega, Brazil’s finance minister, on August 29th. According to the most common definition—two consecutive quarters of falling output—he is wrong. Official figures released earlier that day showed that GDP fell by 0.6% between the first and second quarters (an annualised contraction of 2.4%). Output also fell, by 0.2%, in the first three months of the year.

Brazil’s economy has now shrunk in three of the last four quarters. Most analysts think it will not grow at all this year; a year ago they were expecting growth of 3%. In 2015 the economy is likely to expand by only 1%. Not even Mr Mantega can deny that Brazil is going through a rough patch.

The government blames a weak global recovery from the financial crisis of 2008-09 and a surfeit of public holidays during the month-long football World Cup, which concluded in Brazil on July 13th. These were decreed by federal, state and municipal authorities to ease pressure on public transport as hordes of fans descended on host cities. Itaú, a big Brazilian bank, reckons fewer working days account for half the latest fall in GDP. (Critics note that the Copa was meant to be an economic boon, not a curse.) Industrial production picked up in July, with its fewer feriados—but not nearly enough to offset June’s 1.4% decline. Inventories remain uncomfortably high: carmakers’ stocks, for instance, are 50% bigger than usual.

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Brazil Polls: Silva Gets More Than Sympathy

August 28, 2014

Dimitra DeFotis – Barron’s, 8/28/2014

Marina Silva has emerged as THE candidate to watch in emerging market politics.

As Brazil Socialist Party candidate, Silva has surged ahead of the current president and Worker’s Party candidate Dilma Rousseff in polls, especially in a potential runoff election. Brazilian Social Democracy Party candidate Aecio Neves seems sidelined.

But there are two signposts to watch: one, the approval level for Rousseff’s administration has increased from 32% to 34%. And, Silva could slip and reveal “some of the evident contradictions that already haunt her campaign … her fairly intolerant views on moral issues such as abortion or embryonic stem cell research combined with evidence of her acceptance of old-time politics,” writes Mario Marconini at Teneo Intelligence.

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Insight: Brazil’s slump hits job market as election approaches

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.

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