GM could cancel $1.6 billion investment in Brazil

Reuters – Fortune, 02/21/16

Brazilian economic downturn has soured the auto market.

General Motors Co will reconsider plans for new investment in Brazil if the economic and political situation does not improve, the company’s president Dan Ammann said in an interview published on Sunday.

Brazil was until recently one of the world’s five biggest auto markets, but it has sunk into the worst recession in 25 years and business confidence has been undermined by political uncertainty and a bid to impeach President Dilma Rousseff.

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OECD Sees Brazil 2016 Recession Deepening to 4% Drop

David Biller – Bloomberg, 02/18/2016

The OECD more than doubled its forecast for Brazil’s 2016 recession, projecting it will be even worse than last year. That makes it more bearish than the International Monetary Fund and most analysts surveyed by Bloomberg.

Brazil’s economy will contract 4 percent this year after a 3.8 percent recession in 2015, the Organization for Economic Cooperation and Development said Thursday in a report. The 2016 forecast was revised down from a prior 1.2 percent decline, and is worse than estimates of all but two of 35 analysts surveyed by Bloomberg. Their median forecast is for a 2.8 percent drop this year after a 3.7 percent decline last year.

Latin America’s largest economy is sinking as demand withers. Consumers who for most of the past decade have been Brazil’s growth engine have had their confidence shot by rising joblessness and double-digit inflation. At the same time, investment has been rattled by the nation’s largest-ever corruption scandal, and the government is struggling to implement a fiscal adjustment to shore up its finances.

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Brazil’s Bust is Worse Than We Thought

Patrick Gillespie – CNN Money, 01/19/2016

The International Monetary Fund sharply downgraded its economic forecast for Brazil Tuesday. It was by far the largest revision of all major countries, according to its World Economic Outlook.

Brazil fell deep into a self-inflicted recession last year — the longest downturn for the country since the 1930s. The IMF and other forecasters thought Brazil would still be in a recession this year, but it wouldn’t be as bad as 2015.

Nope.

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Brazil Recession Deepening With Three Lost Years, IMF Says

David Biller – Bloomberg Business, 01/19/2016

Brazil won’t return to growth until at least 2018 after two years of recession and one of stagnation, marking the first time in over a century that Latin America’s largest economy fails to expand for that long, the International Monetary Fund said.

The IMF cut Brazil’s 2017 economic forecast to stagnation from 2.3 percent growth as it updated its World Economic Outlook, last published in October. Gross domestic product will shrink 3.5 percent this year after contracting 3.8 percent in 2015, it said Tuesday. That would be the first time since 1901 that Brazil has back-to-back recessions deeper than 3 percent, according to data from the government’s economic research institute, known as IPEA.

The estimates mean the Washington-based lender is now more pessimistic than all but four of the 23 economists surveyed by Bloomberg, whose median estimate is for Brazil to expand 1 percent next year.

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Brazil’s Carnival Lovers Face Sobering Moment as Country Braces for Recession

Jonathan Watts – The Guardian, 01/12/2016

When it comes to mood making in Brazil, there are few institutions that can match the samba schools of Rio de Janeiro.

For a week each year at Carnival, they embody exuberance with a pulsating parade of spectacular floats, gyrating dancers and bateria throbbing with the rhythms of tamborims, chocalhos, surdos and drums.

But even these professionally upbeat performers are wondering how long the party can last as the country’s economy suffers what is forecast to be the deepest recession in more than a century.

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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.

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Fitch Downgrades Brazil to junk, with negative outlook

Jeffrey T. Lewis – The Wall Street Journal, 12/16/2015

Fitch Ratings cut Brazil’s sovereign credit rating for the second time this year, citing the country’s ballooning budget deficit, political turmoil and a deeper-than-expected recession, and leaving the country’s debt with junk status and dealing a fresh blow to Brazilian President Dilma Rousseff as she struggles to revive the economy and avoid impeachment.

The downgrade left Brazil’s rating at BB+, one notch into junk territory, with a negative outlook.

Fitch is the second of the big-three ratings companies, after Standard & Poor’s, to downgrade Brazil’s debt to junk, which could trigger a selloff of Brazilian assets and weaken the currency. It will also make it more expensive for the Brazilian government to borrow, at a time when Finance Minister Joaquim Levy is trying to cut the government budget deficit.

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Brazil’s October retail sales unexpectedly rebound

David Biller – Bloomberg, 12/16/2015

Brazil’s retail sales rebounded in October, surprising analysts who expected a decline as the economy heads to its longest recession since 1931.

Sales jumped 0.6 percent, from a revised 0.3 percent decline in September, its first increase after eight straight drops, the national statistics agency said in Rio de Janeiro. All but one of 35 economists forecast sales would fall, according to a Bloomberg survey. The median forecast was for a 1.1 percent drop.

Brazil has sunk into recession as consumer confidence is undercut by above-target inflation, rising joblessness and the highest borrowing costs since 2006. The October jump is seen as an outlier by analysts at several banks, including BNP Paribas SA, Banco Bradesco SA, Banco Safra SA, and Banco Santander SA.

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Brazil court suspend impeachment process against President Dilma Rousseff

Rogeria Jelmayer – Wall Street Journal, 12/9/2015

SÃO PAULO—Brazil’s Supreme Court Wednesday suspended the impeachment process against President Dilma Rousseff until at least next week, a delay analysts say carries risks for Ms. Rousseff.

The president has been accused by a fiscal watchdog of manipulating the numbers of her government’s budget to disguise poor fiscal performance.

She has denied any wrongdoing.

Ms. Rousseff and her supporters are trying to get through the impeachment process as quickly as possible because they feel she has enough support in Congress at the moment to either derail the process before it reaches trial in the Senate, or to win there. The president could lose some of that support if the process is drawn out because information damaging to her case could come out, analysts say.

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Brazil’s Vice President sends letter criticizing President Dilma Rousseff

Paulo Trevisani & Rogerio Jelmayer – The Wall Street Journal, 12/8/2015

BRASÍLIA—Brazil’s already turbulent political situation took an extraordinary turn Tuesday with the publication of a letter sent by Vice President Michel Temer to embattled President Dilma Rousseff in which Mr. Temer accuses the president of having no confidence in him or his party.

The vice president’s authorship of the letter, which was published in several local newspapers Tuesday, was confirmed by Mr. Temer’s spokesman. The president’s press office had no immediate comment on the letter.

Ms. Rousseff is facing an impeachment process that the president of the lower house of Brazil’s Congress, Eduardo Cunha, approved last week. Ms. Rousseff is accused of illegally manipulating the numbers in the national budget; she has said her administration did nothing wrong.

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