Brazilian President’s approval rating drops

February 9, 2015

Rogerio Jelmayer – The Wall Street Journal, 2/8/2015

Brazilian President Dilma Rousseff ’s approval rating fell to a record low for her amid Brazil’s poor economic performance and corruption allegations involving the state-run energy company, poll results showed Sunday.

According to a survey by the Datafolha polling institute, 23% of respondents said the Rousseff administration was “excellent or good,” compared with 42% in a poll published in December. Ms. Rousseff’s approval rating reached the lowest level for a country’s president since 1999, when Fernando Henrique Cardoso was in the post.

The drop in Ms. Rousseff’s approval rating came as Brazil´s economy is failing to regain traction and state-run energy company Petróleo Brasileiro SA, or Petrobras, is in the middle of a corruption scandal.

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Petrobras to help pull Brazil into recession

February 9, 2015

Kenneth Rapoza – Forbes Magazine, 2/9/2015

A few months ago, I asked here whether Petrobras could possibly disappoint investors more? That answer is now a resounding yes, it can!

Last week, two of Brazil’s largest banks revised their 2015 forecast for the country’s GDP. Thanks to Petrobras, it’s now negative. Only Russia and Argentina’s economy is expected to do worse than Brazil’s within the emerging market universe. As they say in Portuguese, “parabens”.

Or…congratulations, Petrobras, for a job terribly done.

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Brazil’s Global Ambitions

February 6, 2015

Harold Trinkunas – The Brookings Institution, 2/5/2015

When President Dilma Rousseff first took office in 2010, Brazil’s future looked exceptionally bright. For nearly a decade, the country had benefited from Asia’s enormous appetite for its commodities. This allowed Brazil to reduce poverty and expand the middle class while at the same time sustaining a remarkable growth rate, becoming the seventh largest economy in the world in 2014.

But by the time Rousseff was sworn in for a second term on January 1, 2015, she faced serious decisions about Brazil’s future. Brazil’s development model based on domestic consumption and commodity exports has reached its limits and the real is significantly overvalued, thus undercutting the competitiveness of its non-commodity-based export sectors. Moreover, the Southern Common Market, Mercosur, which had once showcased Brazil’s leadership in regional integration, now ties Brazil’s flagging economy to two of the most troubled economies in South America—Argentina and Venezuela. At the same time, the two most significant global trade negotiations in a decade, the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership, are nearing completion without Brazil.

Brazil has sought to play the role of a major power on the global stage since the beginning of the twentieth century, but it will not earn this status just by virtue of its size, burgeoning population and impressive economic achievements. Historically, rising powers acquired dreadnoughts or sizeable armies to achieve influence. Today, they also seek to become a permanent member on the United Nations Security Council or lead the World Trade Organization.[1] Brazil under Dilma stands at a crossroads: it can try to parlay its rising economic might and soft power into global influence, or it can remain a regional power, albeit a significant one, with limited influence on the course of world events. To turn its aspirations into reality, Brazil will have to deploy its national capabilities more effectively to shape the rules governing the international order.

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What A Surreal Day For Brazil

January 29, 2015

Linette Lopez – Business Insider, 1/28/2015

In the past year or so Brazil’s economy has gone from one of magnificent growth to one of incredible disappointment, and two stories out today especially embody the epic scale of the country’s fall from grace.

One story is about a man, the other is about a company.

The man is Eike Batista — once the 7th richest man in the world aggressively angling for the top spot, he seemed to have everything. He was the man who went into the jungles of the Amazon and came out with a fortune built on his holding company, EBX. He raced speed boats, owned Brazilian jets, married a model, and made friends with world leaders.

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Brazil registers record deficit in current accounts

January 26, 2015

Lise Alves – The Rio Times, 1/26/2015

Brazil’s current accounts in 2014 registered a record deficit of US$90.948 billion, according to data released by Brazil’s Central Bank (CB) on Friday, January 23rd. The result was well above 2013’s deficit of US$81.108 billion and the highest registered since the CB started the series in 1947.

Last year’s annual deficit is equivalent to 4.17 percent of the country’s GDP, the worst result since 2001.

The Central Bank released both December 2014 results as well as results for the entire year. For December, the country’s current account, which is measured by the sum of the balance of trade (goods and services exports less imports), net income from abroad and net current transfers, registered a deficit of US$10.317 billion.

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Brazil’s most populous region facing worst drought in 80 years

January 26, 2015

BBC News, 1/24/2015

Brazilian Environment Minister Izabella Teixeira has said the country’s three most populous states are experiencing their worst drought since 1930.

The states of Sao Paulo, Rio de Janeiro and Minas Gerais must save water, she said after an emergency meeting in the capital Brasilia.

Ms Teixeira described the water crisis as “delicate” and “worrying”.

Industry and agriculture are expected to be affected, further damaging Brazil’s troubled economy.

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The Curious Case of Brazil’s Closed Economy

January 22, 2015

Otaviano Canuto – Huffington Post, 1/21/2015

Brazil’s is an unusually closed economy as measured by trade penetration, with exports plus imports equal to just 27.6 percent of GDP in 2013. Brazil’s large size is often used to explain its relative lack of openness. But this argument does not stand up to scrutiny: Among the six countries with larger economies than Brazil’s, the average trade-to-GDP ratio is 55 percent. Given the size of its economy, we would expect Brazil’s trade to be equal to 85 percent of GDP, three times its actual size.

Controlling for other dimensions of country size (surface area and population) and structural features often associated with trade openness (urbanization, manufacturing share in GDP) still cannot adequately explain Brazil’s lack of openness.

Lack of trade dynamism at the company level

Brazil’s lack of openness becomes even more apparent if we look at the number and characteristics of exporting companies. Very few Brazilian companies export. Indeed, the absolute number of exporters in Brazil — fewer than 20,000 — is roughly the same as that of Norway, a country of just over 5 million people compared with Brazil’s 200 million. This means that, while in Norway there is one exporting company for about every 250 Norwegians, the ratio in Brazil is one for every 10,000 Brazilians.

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