Brian Ellsworth – Reuters, 08/10/2016
Government employee Jose Lara this month used some vacation days to take a long scenic bus ride through the verdant plateaus and sweeping savannas of southern Venezuela, but the trip was anything but a holiday.
It was a 36-hour grocery run.
Lara took an overnight bus and then a pick-up truck to get across the border to neighboring Brazil to buy food staples that have gone scarce in Venezuela’s crisis-stricken economy.
Tyler Cowen – Bloomberg, 08/11/2016
Brazil, it is often and not quite fairly said, is the country of the future and always will be. As the Olympics focuses global attention on the country, it’s worth exploring the various ways in which this maxim is — and may not be — true.
The puzzle with Brazil is neither its successes nor its failures, but rather the combination of the two. The country has such a dynamic feel, and in the postwar era it saw many years of double-digit economic growth. The Economist featured the country on its cover in 2009 as the next miracle take-off, and in 2012 Germany’s Der Spiegel published a long article titled “How Good Governance Made Brazil a Model Nation.”
Yet Brazil never caught up to the developed world: Its gross domestic product per capita falls about 4 to 7 times short of the U.S. — about where it was more than a century ago. It is now experiencing one of the most severe depressions of any country in modern times. The president, Dilma Rousseff, is in the midst of an impeachment process. The combination of corrupt and violent police, muggings of athletes, polluted water and inadequate facilities have led many to wonder whether Brazil can pull of the Olympics without major embarrassment.
Olivia Arguinzoni- Americas Quarterly, 08/09/2016
New leadership atop Brazil’s massive national development bank is unwinding a decade of rampant lending that fed large conglomerates and strained the country’s finances.
Over the past half-century, Brazil’s Banco Nacional de Desenvolvimento Economico e Social (BNDES) built huge power plants and highways through the industrial southeast, aided social programs in the drought-ridden northeast, and helped create some of today’s world-leading companies like airplane-maker Embraer and pulp producer Fibria. More recently, it helped save the Rio Olympics with an emergency loan.
Such mega-investment projects played a central role in Brazil’s economy over the last ten years of Workers’ Party rule, during which former President Luiz Inácio Lula da Silva and suspended President Dilma Rousseff showed a particular penchant for state-sponsored development.
Andrew O’Reily – Fods News Latino, 08/02/2016
Seven years ago when Brazil’s then-President Luiz Inácio Lula da Silva announced that Rio de Janeiro would host the 2016 Summer Olympic Games on the city’s famed Copacabana beach, there was the feeling in the air that something momentous was about to happen in the South American nation.
Lula promised Brazilians that the Olympics and the 2014 World Cup would showcase the country as an emerging power on the world stage that could stand shoulder-to-shoulder with the likes of the United States, Western Europe and Russia.
For Brazil, he suggested that day in 2009, the sky was the limit.
Michale O’Boyle and Bruno Federowski – Reuters, 07/13/2016
Foreign investors in Latin America are warming to Brazil as a promising turnaround bet while souring on Mexico and its landmark energy reform that has yet to deliver.
Brazil has yet to recover from its worst recession in decades, inflation and interest rates remain among the highest in the region and it is saddled with a bloated public sector. In contrast, Mexico’s economy is growing at around 2 percent, has lower fiscal deficits and sounder public finances.
But while Brazil interim president Michel Temer’s reform agenda offers some promise, Mexico, once a darling of foreign investors, is now a source of disappointment. A slump in oil prices dashed hopes that President Enrique Pena Nieto’s energy sector opening in 2013 along with telecoms and banking reforms would boost foreign investment and supercharge growth while clouds are now gathering over its budget and economy.
Lise Alves – The Rio Times, 07/11/2016
SÃO PAULO, BRAZIL – If suspended president Dilma Rousseff is impeached from office in August, Brazil’s interim President, Michel Temer, plans to take his first official overseas trip as leader of the country in September to China, Industry and Foreign Trade Minister Marcos Pereira announced over the weekend. Temer’s main goal is to boost Brazilian exports to the Asian country, especially of aircrafts and beef.
Last year, during Chinese Prime Minister Li Keqiang’s visit to Brazil, the two countries signed investment agreements worth US$53.3 billion to be made by Chinese companies in Brazil in the areas of agribusiness, auto parts, equipment transport, energy, railways, highways, airports, ports, storage and services. Now Temer wants to increase the presence of Brazilian products in China.
Julia Leite & Paula Samba – Bloomberg, 06/27/2016
Brazil is winning over derivatives traders as Acting President Michel Temer seeks to repair the nation’s finances.
The cost to hedge against losses in Brazil’s bonds with credit-default swaps has tumbled by almost a third in the past six months, the biggest drop among the world’s major economies. Prices of the swaps are also now back to levels that prevailed before S&P Global Ratings cut the country’s rating to junk in September.
The turnaround is part of a rebound in Brazil’s financial assets this year fueled by the removal of President Dilma Rousseff from office while she faces an impeachment trial. Since taking the reins last month, Temer has proposed spending caps to help shrink a near-record budget deficit and struck a deal to ease a fiscal crisis roiling Brazilian states amid the longest recession in more than a century.