Experts give their prescriptions for Brazil as the commodity boom ends

March 27, 2015

Joe Leahy – Financial Times, 3/25/2015

Brazil’s economy has slowed sharply. The brakes were applied by the end of the commodity supercycle that occurred in the first decade of the 21st century combined with rapid credit growth.

The debate in Brazil has returned to the vexed question of how to make one of the world’s most inward-looking economies more competitive.

The answer lies in improving education, streamlining taxation, simplifying bureaucracy in general, and fixing infrastructure. But beneath these concepts are complex questions that run as deep as Brazilian politics and culture itself.

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What Investors Think About Brazil Political & Currency Risk

March 27, 2015

Kenneth Rapoza – Forbes, 3/27/2015

Michael Reynal, portfolio manager at the $287 million RS Emerging Markets Fund (GBEMX) puts it this way: “Politics are ruining a good investment story in Brazil.”

It has oil. It’s the No. 1 orange juice exporter, coffee exporter, sugar exporter, iron ore exporter, beef exporter and the No. 2 soybean exporter. It has a diverse economy and strong banks. It has a growing consumer class and they’re constantly aching to spend like crazy North Americans. Nobody cares.

A colossal corruption scandal involving Petrobras and the ruling Workers’ Party has hundreds of thousands protesting in the streets. Two weeks ago, some of them even called for impeachment. And this week, a polling firm called MDA showed that more than 59% of respondents think president Dilma Rousseff should be impeached.

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Dengue fever in Brazil: When it rains, it pours

March 27, 2015

The Economist, 3/28/2015

A MOIST March, combined with the wettest February in 20 years, has brought respite to Brazil’s parched south-east. Last year’s record drought in the region, where two in five Brazilians live and where more than half the country’s output is produced, had stretched into January. So the drenching is welcome. But the rains have also stirred up an old scourge: dengue fever, a disease transmitted by mosquitoes. Its early symptoms resemble flu but it can cause fatal internal and external bleeding.

At least 224,000 cases had been registered across Brazil by March 7th, 162% more than in the same period in 2014, when the dry weather left fewer stagnant puddles in which mosquitoes could breed. The situation is gravest in the state of São Paulo, where 124,000 people have been diagnosed since January, an eightfold increase on last year. Infections have reached epidemic levels in nearly half the state’s municipalities (mostly the smaller ones). São Paulo has seen 67 confirmed fatalities. Mercifully, things in the rest of the country are better, meaning that the situation is less severe than the full-blown epidemic that infected 1.5m people in 2013.

The rain is not the only reason for the current outbreak. Paradoxically, another cause is last year’s drought. Faced with the threat of rationing, people have been storing rainwater, often in open containers, which make good breeding-grounds for mosquitoes. In São Paulo, many of this year’s worst-hit towns were spared during previous dengue flare-ups, so fewer inhabitants have had a chance to develop natural immunity.

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Brazil brewery creates ‘feminist beer’

March 27, 2015

Saffron Alexander – The Telegraph, 3/27/2015

A brewery in Brazil is attempting to challenge the negative stereotypes associated with beer with Cerveja Feminista – a “feminist” beer.

The label features the symbol for gender equality and has been designed to get the advertising industry discussing the way women are portrayed and the lack of female art directors in Brazil.

The company behind the beer is activism group 65|10 – named because 65 per cent of women in Brazil feel underrepresented in adverts and only 10 per cent of those working in advertising are female.

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Brazil uncovers multibillion-dollar tax fraud at Finance Ministry

March 27, 2015

Anthony Boadle – Reuters, 3/26/2015

Brazilian authorities on Thursday said they uncovered a tax fraud scheme at the Finance Ministry’s tax appeals board that may have cost taxpayers up to 19 billion reais ($5.96 billion).

The news came in the midst of a multibillion-dollar corruption scandal at state oil company Petroleo Brasileiro SA , known as Petrobras, that has rattled Brazil’s political establishment and weighed on the fragile economy.

In the latest case, federal police inspector Marlon Cajado said companies bribed members of the CARF, a body within the Finance Ministry that hears appeals on tax disputes, to get favorable rulings that reduced or waived the amounts owed.

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Brazil’s Economy Expanded Slightly in 2014

March 27, 2015

Jeffrey T. Lewis and Rogerio Jelmayer – The Wall Street Journal, 3/27/2015

Brazil’s economy posted in 2014 its worst performance by far under President Dilma Rousseff’s administration, a blow to her prestige as her government works to regain credibility with markets and pass an austerity program through Congress.

The country’s gross domestic product grew just 0.1% in 2014 from 2013, and expanded 0.3% in the fourth quarter from the third, Brazil’s statistics agency said Friday. GDP shrank 0.2% in the fourth quarter of 2014 from the same period a year earlier.

The agency changed the way it calculates GDP starting in the fourth quarter, including activities such as investment in research and development for the first time, to bring the methodology more in line with international standards.

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Brazil’s elites are revolting

March 26, 2015

Gianpaolo Baiocchi and Marcelo K. Silva – Al Jazeera, 3/22/2015

On March 15, hundreds of thousands of demonstrators across Brazil flooded the streets. It was the biggest mobilization since June 2013, when millions took to the streets in protest that began over increased public transit fares and grew to encompass a range of other causes, including World Cup megaprojects, the poor state of public education, the need for political reform and many others.

A different cause united this month’s mobilizations. Protesters could be heard chanting Cold War–era anti-communist slogans, demanding the impeachment of President Dilma Rousseff and even calling for army intervention in domestic politics. Thirty years after the end of Brazil’s military dictatorship, Rousseff and her center-left Workers’ Party (PT) face a growing challenge from the right.

The PT has held national power in Brazil for the last 13 years. But Rousseff is increasingly politically isolated. Re-elected last fall by a slim margin, she now has to contend with the most conservative National Congress since 1964 as well as a decelerating economy, hostile media and a corruption scandal that implicates her party. She has very low approval ratings and has increasingly alienated her party’s traditional base of trade unionists and social movement activists, many of whom are disappointed with her pro-market political appointments. Although opposition parties are not yet calling for Rousseff’s impeachment, there is no question that difficult times lie ahead.

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