Brazil heads for worst recession since 1901

David Biller – The Salk Lake Tribune, 1/5/2016

Brazil’s economy will contract more than previously forecast and is heading for the deepest recession since at least 1901 as economic activity and confidence sink amid a political crisis, a survey of analysts showed.

Latin America’s largest economy will shrink 2.95 percent this year, according to the weekly central bank poll of about 100 economists, versus a prior estimate of a 2.81 percent contraction.

Analysts lowered their 2016 growth forecast for 13 straight weeks and estimate the economy contracted 3.71 percent last year.

Read more…

Brazil keen to further strengthen trade ties with India

PTI – Economic Times, 11/16/2015

Brazil today called for expanding a trade pact with India by adding more products such as frozen chicken (whole) and processed soyabean in the tariff agreement and also stressed on technology transfer and investment in agriculture research.

Brazil is also keen to export ethanol and milk products to India and boost shipments of edible oils. India and MERCOSUR, comprising Brazil, Argentina, Uruguay and Paraguay, already has a preferential trade pact.

“We would like to expand tariff agreement,” said Katia Abreu, the Brazilian Minister of Agriculture, Livestock and Food Supply.

Read more…

 

Brazil’s crisis hits new lows as its outcome gets harder to predict

Paulo Sotero – Financial Times, 10/19/2015

The crisis that has paralysed Brazil’s politics this year and thrown its economy into what is set to be its longest recession since the 1930s has reached new lows. Revelations by Brazilian and Swiss authorities about Swiss bank accounts held by Eduardo Cunha, a Rio de Janeiro congressman and president of the Chamber of Deputies, have complicated opposition efforts to impeach the discredited president, Dilma Rousseff.

Last week, Brazil’s Supreme Court suspended its deliberation of procedures instigated by Cunha as the gatekeeper of Congress to begin Rousseff’s impeachment on the grounds of illegally tampering with the 2014 federal budget and in connection with a massive corruption scandal under federal investigation, involving national oil company Petrobras, construction companies and politicians of all major parties.

Cunha has repeatedly denied that he or his wife and daughter have bank accounts abroad, despite documents made public by Swiss authorities containing his personal address in Rio. Nevertheless, this notorious politician from the evangelical wing of the PMDB party is seen as doomed, as congressional peers mobilise against him under the growing pressure of public opinion. The most urgent political question facing Brazil, then, is not whether Rousseff will be impeached but who will be the next Speaker of the lower house of 513 deputies.

Read more…

China-Brazil link is top threat to global economy

Gene Frieda – Financial Times, 10/19/2015

No longer the source of awe that it once was, Chinzila — the nexus between China and Brazil — has become the number one threat to the global economy.

The spillover from weakening Chinese industrial growth to commodity prices and volume demand has turned financial stress fractures into major faultlines within the emerging markets. Without careful management and co-ordination, it is possible that these faultlines become systemic, with the Chinese renminbi the potential catalyst.

While it has been clear since 2012 that China’s growth model was running out of road, the stock market bust and bungled currency depreciation brought the further realisation that policymakers overestimated their control over the economy.

Read more…

China, Brazil among emerging markets at risk of bank crisis

Tom Beardsworth and Lyubov Pronina – Bloomberg Business, 9/13/2015

Credit growth in China, Brazil and Turkey doesn’t only risk spurring a hangover in bad debt — it also signals a banking crisis is on the horizon, according to the Bank for International Settlements.

A ratio of credit to gross domestic product, a measure of how much private-sector credit has deviated from its long-term trend, stands at 25.4 percent in China, BIS said in a report on Sunday. That’s the highest of any major economy and compares with 16.6 percent in Turkey and 15.7 percent in Brazil.

“Early warning indicators of banking stress pointed to risks arising from strong credit growth,” according to the bank. Historically, a country with a ratio above a 10 percent threshold has a two-thirds chance of “serious banking strains” occurring within three years, BIS said.

Read more…

Brazil Real gains as China measures support commodity producers

Paula Sambo – Bloomberg, 9/9/2015

Brazil’s real climbed to a one-week high as efforts by China to add to growth triggered a bounce in the prices of raw materials.

“There is scope for emerging-market currencies such as the real to strengthen given the improvement in risk sentiment,” Mark McCormick, a foreign-exchange strategist at Credit Agricole SA, said from New York.

The local currency advanced after China, Brazil’s largest trading partner, pledged to accelerate construction of some major projects and reduce companies’ tax burdens. The real also gained as President Dilma Rousseff’s administration was said to be studying a tax increase on Brazil’s top earners to raise revenue and narrow an expanding budget deficit.

Read more…

A silver lining to Brazil’s troubles

Joe Nocera – The New York Times, 9/4/2015

Of all the BRICS, Brazil would seem, on the face of it, to be in the worst shape.

BRICS, of course, stands for Brazil, Russia, India, China and South Africa, a catchphrase that was meant to connect their rapidly growing economies. But that was then. Today, their economies are sluggish at best, and their prospects no longer seem so bright.

Everybody knows about China’s troubles: its falling stock market, its slowing economy and the amateurish attempts by the government to revive them, as if they should somehow snap to when the Communist Party gives an order.

Read more…

Brazil: engine trouble

Joe Leahy – Financial Times, 8/2/2015 

The boardroom of heavy vehicle maker MAN in São Paulo is decorated with a Boys’ Own collection of model trucks, soccer balls and the jerseys of local football teams.

But the toys do little to lift the mood here. Once a champion of the Brazilian corporate world with double-digit growth rates, the truck industry, like the national football team which was thrashed by Germany in last year’s World Cup, has fallen on hard times.

In the first six months of this year, truck and bus production fell 45 per cent compared with a year earlier. It is a disaster that is expected to be repeated across Latin America’s biggest economy this year.

Read more…

Brazil hopes to strengthen trade relations with Russia

Sputnik, 7/27/2015

Brazil wants its trade relations with Russia to strengthen and continue past the end of the Moscow-imposed ban on agricultural imports from Western countries that hit it with sanctions, Brazil’s Minister of Agriculture, Livestock and Supply Katia Abreu told Sputnik Brazil.

The European Union, the United States and their allies imposed several rounds of sanctions against Russia for its alleged involvement in the Ukrainian crisis in 2014. Moscow has repeatedly denied those claims, and, in August 2014, responded by imposing a year-long ban on certain food imports from the countries that imposed the economic restrictions.

In late June, Russian President Vladimir Putin signed a decree extending the countermeasures.

Read more…

Brazil economy still faltering, with GDP contraction on par with Russia’s

Kenneth Rapoza – Forbes, 6/19/2015

Brazil’s economy is grinding to the bottom. But the bottom doesn’t appear to have been hit just yet.

The monthly GDP proxy at the Central Bank of Brazil, known as the IBC-Br index, surprised on the downside on Friday by falling 0.84% in April. That’s from a downwardly revised -1.51% decline in the previous month and is now compatible with a yearly drop of 3.13%.

Putting this into perspective, Brazil’s BRIC counterpart Russia is expected to contract 3.25% this year and its economy is facing weaker oil prices and sanctions against its oil and finance companies. Brazil is moving in line with a sanctioned economy that is over dependent on one commodity, while Brazil has good relations with the world and a much more diverse economy.

Read more…