Does Brazil deserve its ‘B’ for BRICS

June 3, 2013

Anthony Pereira – CNN, 06/03/2013

When former Goldman Sach’s economist Jim O’Neill first went to Brazil after coining the acronym BRIC, someone asked him whether he had included the “B” just to make the name sound good.

Such skepticism is becoming common again, as investors compare the projected rate of growth in Brazil this year — just 3% — to that in China and India, around 8% and 6% respectively.

So does Brazil still deserve to be seen as an economic powerhouse?

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Brazil still a land of opportunity for some

May 28, 2013

Brian Winters – Reuters, 05/24/2013

Just two years ago, Brazil was still hailed as “The Near China” – an economy that offered East Asia-style 7-percent growth rates in a seductive, sun-kissed package that was closer to home for western investors.

Today, the thrill is gone.

Economic growth limped in at less than 1 percent last year, 2013 is looking pretty mediocre, and words like “facade” and “bubble” are being used to describe Brazil by some in the international press.

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Brazil: The creaking champions

April 22, 2013

Joe Leahy – Financial Times, 04/21/2013

In 2010, when 60 Minutes came to Brazil to do a piece on the “World’s Next Economic Superpower”, the US television programme chose Eike Batista as the ambassador for the country.

“You know, in the last 16 years, Brazil has put its act together. This is it. Hello, time for Americans to wake up,” Mr Batista said with trademark brashness.

In retrospect, the discovery by primetime TV of Brazil’s economy should itself have been a sell signal for investors that a long boom in Latin America’s biggest economy, fuelled by high commodity prices and credit, was peaking.

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OGX penniless by 2014 triggers Batista cash hunt: Brazil credit

February 25, 2013

Rodrigo Orihuela, Boris Korby – Bloomberg, 02/25/2013

Bondholders are increasing pressure on Brazilian billionaire Eike Batista to raise outside money for his oil producer, pushing up borrowing costs to levels associated with companies on the verge of collapse.

After surging to more than 11.6 percent last week, yields on $2.56 billion of notes due 2018 issued by OGX Petroleo & Gas Participacoes SA ended Feb. 22 at 11.06 percent following a report by Sao Paulo-based newspaper Valor Economico that Batista is in talks to sell a stake in OGX to Malaysia’s state energy company. Company officials declined to comment on the report.

OGX’s cash hoard dropped 23 percent in the six months through September to 5.1 billion reais ($2.56 billion) as subpar production at its first two oil wells put output goals out of reach. Bonds of OGX, which will run out of cash in less than two years at its current burn rate, have suffered even after Batista said in October that he would pump $1 billion of his own money into the company that he founded in 2007.

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Brazil plans a shift in its strategy

January 22, 2013

John Lyons, Luciana Magalhaes, Matthew Cowley – The Wall Street Journal, 01/04/2013

Brazil is shifting gears in its effort to revive its troubled economy, away from aggressive currency and interest-rate policies to a more hands-off approach, Finance Minister Guido Mantega said in an interview.

“In 2013 we will reap what we have sown,” he said, predicting a return to strong growth after two years in the doldrums. “2013 will be calmer, with fewer measures, because they’ve been done.”

Brazil, the world’s second-largest developing economy after China, is a key bellwether for the economic health of the emerging world and a major source of growth, as Europe, the U.S. and Japan wrestle with debt woes.

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Brazil analysts cut 2013 GDP forecast, raise inflation call

January 8, 2013

David Biller – Bloomberg Businessweek, 01/07/2013

Analysts covering Brazil lowered their forecast for growth this year and raised it for inflation, as the world’s second-biggest emerging market struggles to rebound from a slowdown that has lasted more than a year.

Brazil’s gross domestic product will expand 3.26 percent this year, according to the median estimate in a central bank survey of about 100 analysts published today, down from 3.3 percent the previous week. Inflation this year will reach 5.49 percent, up from the previous week’s estimate of 5.47 percent. Economists also boosted their 2012 inflation forecast for the fifth straight week to 5.73 percent from the previous estimate of 5.71 percent, the survey showed.

President Dilma Rousseff’s administration has injected a series of stimuli into Brazil’s $2.5 trillion economy, which economists forecast will grow this year the slowest among the BRIC group, which includes Russia, India and China. Meanwhile the central bank has cut the benchmark Selic rate by 525 basis points, the most of any Group of 20 nation, to a record 7.25 percent.

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Analysis: Rousseff’s bet – Brazil has atoned for economic sins

January 4, 2013

Brian Winters – Reuters, 01/04/2013

President Dilma Rousseff’s big bet in 2013 is that Brazil has matured enough to escape from a financial straitjacket that markets have imposed since the 1990s, when inflation soared beyond 2,000 percent and the state was virtually bankrupt.

Since that chaotic era, Brazil has played by a more conservative set of rules than most modern economies – with laws that tightly regulate government spending, interest rates exceeding 40 percent on consumer loans, and other rules and practices designed to reduce financial risks and ensure the bad times don’t return.

Now Rousseff, a left-leaning economist who likes to make key financial policy decisions herself, is boldly wagering that Brazil is ready to turn the page.

Read more…


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