Brazil’s Slumping Economy and Bribery Scandal Eat Away at Dilma Rousseff’s Popularity

March 20, 2015

Simon Romero – The New York Times, 3/20/2015

President Dilma Rousseff ran for office declaring that she would harness an oil bonanza in Brazil to supercharge the economy while avoiding the corruption and mismanagement that have plagued other oil-rich countries in the developing world.

But less than three months into her second term as president, Ms. Rousseff is fighting for her political survival as Petrobras, the national oil company she oversaw and has championed, reels from a colossal bribery scandal.

Compounding her problems is the prospect that the economy could shrink in 2015 for the second consecutive year, the first such contraction here since the onset of the Great Depression in 1929 and 1930.

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Protests in Brazil: The wisdom of crowds

March 20, 2015

The Economist (print edition), 3/21/2015

DILMA ROUSSEFF, Brazil’s president, expected the anti-government protests on March 15th to be big. She convened a meeting of a crisis group at her official residence to monitor them. But nobody, including the organisers, imagined they would be as massive as they turned out to be. Police in São Paulo put the size of the crowd on Avenida Paulista, the preferred venue for such gatherings, at more than 1m; Datafolha, a pollster, counted 210,000. Either way, it was the biggest political demonstration in the country’s biggest city since the diretas já (“elections now”) movement that helped end military rule in 1985. Overall, police estimated that 2.2m people turned out in dozens of cities across all 27 states. That dwarfs the number who took to the streets on any single day in June 2013, the most recent occasion when Brazilians vented their anger at politicians en masse.

Trade unions, which had organised (much smaller) pro-Dilma demonstrations two days earlier, dismissed the protesters as privileged white people. Many were not. “I am black, poor and want Dilma out,” declared a demonstrator from one of the nine mobile stages along Avenida Paulista. Many wore the national football team’s yellow-and-green jerseys. Opposition politicians wisely stayed away. They realised that their presence would obscure the bottom-up message and reinforce the government’s claim that behind the protests were sore losers of last October’s elections, won by Ms Rousseff and her left-wing Workers’ Party (PT).

The grievances of 2013 were diffuse. Today’s are directed squarely at Ms Rousseff and the PT. Some protesters—about a quarter on Avenida Paulista, according to one poll—want her to be impeached over a multi-billion-dollar bribery scandal at Petrobras, the state-controlled oil giant. Most others simply want to show that they are fed up with sleaze and economic mismanagement, which has pushed up inflation and is likely to trigger a recession this year. A vocal fringe called for military intervention—but was shouted down.

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Brazil’s economic difficulties are cyclical argues President Rousseff

March 13, 2015

Mercopress, 3/13/2015

“We’re going through a time of cyclical difficulties but we’re a country with a solid foundation,” the head of state said at the inauguration of a project to expand and modernize the Port of Rio de Janeiro.

Rousseff, who again refused to characterize Brazil’s current situation as a crisis, defended her austerity program in the face of criticism from the opposition and some government allies.

Brazil’s economy is stagnant and may contract 0.7% this year, according to the latest forecasts, while the country’s federal, state and local governments ended 2014 with a cumulative primary budget deficit (before interest payments) equivalent to 12.51 billion, putting public finances in the red for the first time since the current reporting methodology was adopted in 2001.

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Putting Brazil’s political risk in perspective

March 13, 2015

Kenneth Rapoza – Forbes, 3/13/2015

The case for Brazil is not hard to make: diverse economy, rising incomes, cheap assets, high investment grade yield, and despite scandal a relatively stable government. But the noise is so deafening, and the recent data so awful, that it’s hard to make the case that Brazil has hit bottom. The bottom is coming, only not until next year.

For the contrarian investor, maybe you get ‘em while they’re hot?

Think about this for instance: the Brazilian real is trading near historic lows at R$3.20 on Friday’s opening in São Paulo. It is projected to stay there for another year, hovering between R$3.00 and R$3.15, according to Barclays Capital’s estimates. If you bought a local currency Brazilian bond, and held it for three years, you’d be getting 12.75% interest at least, and most likely a gain from the currency when the real strengthens again in a year or two.

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Brazil real seesaws in volatile session

March 10, 2015

Reuters, 3/10/2015

The Brazilian real moved 1 percent up and down in less than two hours of trading on Tuesday as a combination of global headwinds and domestic problems made the currency vulnerable to wild swings.

The real opened more than 1 percent lower and hit 3.1722 per dollar, its weakest in more than 10 years, before erasing losses to rise more than 1 percent to 3.097.

It last traded at 3.1244, 0.2 percent stronger than Monday’s close.

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Brazil femicide law signed by President Rousseff

March 10, 2015

BBC News, 3/9/2015

Brazil’s President Dilma Rousseff has signed a new law which sets tough new penalties for the killing of women and girls.

Murders linked to domestic violence will carry sentences of between 12 and 30 years.

President Rousseff said the new law sends a clear message to women that the state would protect them.

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Brazil’s Levy says weak real not big fix for economy

March 10, 2015

Reuters, 3/10/2015

Brazil’s economic growth depends more on the approval of austerity measures needed to rebuild investor confidence than on a weaker currency, Finance Minister Joaquim Levy told O Globo newspaper.

One day after the Brazilian real tumbled to its weakest level in more than 10 years, Levy downplayed the notion that a weak currency is the key to making Latin America’s largest economy grow again.

“The idea that a weaker currency is the big solution to Brazil is not correct, despite its popularity in some circles,” he said in an interview published on Tuesday.

 

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