Brazil inflation reaches highest level in 13 years

Rogerio Jelmayer – The Wall Street Journal, 01/08/2016

Consumer price inflation in Brazil increased last year to the highest rate in 13 years, despite the country’s economic contraction, underscoring one of the main challenges facing Latin America’s largest economy.

Brazil’s consumer-price index, known as the IPCA, rose 10.67% last year, compared with an increase of 6.41% in 2014, the Brazilian Institute of Geography and Statistics, or IBGE, said Friday. In December, the IPCA increased 0.96%, compared with a rise of 1.01% in November.

The annual inflation rate reached its highest level since 2002, when it was 12.53%. This marked the fourth time that consumer prices surpassed the tolerance band set by the central bank under its inflation target regime, which has been in place since 1999.

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Brazil’s unemployment rate rose sharply

Paul Kiernan – The Wall Street Journal, 9/29/2015

Brazil’s national unemployment rate rose sharply in the May to July period and wages declined, as the economy likely continued to deteriorate.

Joblessness rose to 8.6% in May to July from 8% in the previous three-month period and 6.9% a year earlier, the Brazilian Institute of Geography and Statistics, or IBGE, said Tuesday. Average monthly wages fell to 1,881 Brazilian reais, the lowest level, adjusted for inflation, since the September to November period of 2014.

The data released Tuesday were from a new, nationwide unemployment survey, known as PNAD, that the IBGE is currently phasing in. The old survey, which will be phased out after this year, only collected data from six major metropolitan areas.

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The “Calamitous Club” has a new member: Brazil

Eric Chemi – CNBC, 8/1/2015

Earlier this week, Deutsche Bank put out an analysis of the most woeful countries. In particular, the write up contained a smart little paragraph on a global powerhouse that used to be a darling of the global economy:

Arthur Okun’s misery index sums unemployment with inflation as a measure of hardship – at least for the man on the street. Suffering politicians, meanwhile, are in serious trouble when they join the so-called Calamitous Club. Membership – reserved for governments whose poll ratings are below their country’s inflation rate – is exclusive. Indeed, until last week only Venezuela’s ruling socialists made the grade. No longer.

The piece was part of a broader note, authored by UK-based managing director Stuart Kirk. Here is where the juicy part begins:

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Why a slowdown in Brazil is almost as bad as the China slowdown

Bob Pisani – CNBC, 7/31/2015 

Can it get any worse for Brazil? Last week the government lowered the country’s growth output from a modest gain to a contraction of 1.49 percent. Unemployment, no doubt under-reported, is at 6.9 percent in June and rising.

Dilma Rousseff, the country’s president, who had previously been a big spender, is now pushing austerity to maintain the country’s credit rating.

To little avail. She is on a collision course with Congress, which wants to raise wages and spend even more. Labor unions are threatening ongoing strikes.

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Brazil’s faltering economy needs some tough love

Samantha Pearson – Financial Times, 5/12/2015

For Brazil’s economists, 2015 will certainly be a year to forget. Latin America’s biggest economy is expected to contract by more than 1 per cent this year, marking the country’s worst recession in 25 years.

Meanwhile, inflation is set to end the year above 8 per cent, breaking the target range for the first time since 2003.

To add to the country’s woes, the corruption scandal at state-controlled oil company Petrobras — believed to be the biggest of its kind in Brazilian history — has the potential to slow growth further and accelerate job losses.

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Brazil’s economy: A tight squeeze

The Economist, 4/30/2015

DO NOT envy Brazil’s monetary policymakers. The economy is faltering. With business confidence plumbing record depths, unemployment up and real wages down—by 3% year-on-year in March, the most in more than a decade—demand remains fragile. Supermarket sales fell by 2.6% last month, compared with the previous one. Output will probably contract by at least 1% this year. Yet with prices rising at the fastest rate since 2003, the central bank’s rate-setters had little choice when they met on April 29th but to raise interest rates by another half a percentage point, to 13.25%.

If Brazil is fortunate, the painful rate hike could leave policy-makers with a bit more room to manoeuvre when they next convene in June. One source of inflationary pressure is easing: the real has rebounded by more than 10% against the dollar since its 12-year trough six weeks ago. This, notes Alberto Ramos of Goldman Sachs, an investment bank, mainly reflects the prospect that the Federal Reserve will keep its own rates rock-bottom for a while longer, given the recent underwhelming performance of the American economy. But it also illustrates the markets’ belief that the wily finance minister, Joaquim Levy, will manage to keep his pledge and turn a primary budget deficit (excluding interest payments)‎ of 0.6% in 2014 into a surplus of 1.2% this year.

This faith was shaken on April 30th, when official figures showed that in March the government managed to set aside a piffling 239m reais ($79m) to pay creditors; analysts had been expecting something closer to 5 billion reais. Meanwhile, the total public-sector deficit ballooned to 7.8% of GDP, inflated by a 34.5 billion reais monthly loss stemming from the central bank’s currency-swap programme. The economic slowdown also appears to be hurting the government’s tax take.

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Brazil’s biggest problem isn’t Petrobras

Matt Phillips – Quartz, 4/28/2015

It’s not the scandal, stupid.

Last week the Brazilian oil giant Petrobras wrote down the value of its assets by some $17 billion, including $2.1 billion reflecting the impact of bribes and graft. The scandal—in which company executives allegedly received kickbacks in exchange for awarding contracts at inflated values—has prompted worries that it could creep closer to President Dilma Rousseff, who served as the chairwoman of Petrobras, during the years when much of the alleged bribery took place. So far, she hasn’t been implicated.

But as the nation’s attention continues to be riveted by the scandal, Brazil’s economy is decelerating rapidly. Numbers out this morning show that unemployment rose to 6.2% in March, up from 5.9% in February and the highest since March 2012.

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Brazil’s March Unemployment Rate Climbs in Blow to Rousseff

David Biller and Mario Sergio Lima – Bloomberg Business, 4/28/2015

Brazil’s March unemployment rate climbed to the highest level in three years as Latin America’s largest economy slips closer to recession amid rising interest rates and fiscal tightening.

The jobless rate rose to 6.2 percent from 5.9 percent a month earlier, according to data released by Brazil’s national statistics agency (IBGE). That was higher than the 6.1 percent median estimate from 32 economists surveyed by Bloomberg.

Market reaction to the report was mixed. Swap rates fell, while the currency rose and stock futures pointed to a higher opening in Sao Paulo.

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Haitian immigrants’ ‘Brazilian dream’ sours as work hard to find for tens of thousands

Adriana Gomez Licon (AP) – U.S. News, 3/3/2015

Under a scorching sun, dozens of Haitians shuffled impatiently about the brick-walled courtyard of Our Lady of Peace Catholic Church. The sight of an approaching employer sparked a skirmish, with the men pushing against each other, jostling for attention.

“How many people you need?,” several men shouted. “I need a job, what do you want me to do?” No matter what the job was, someone in the crowd yelled out, “I can do that!”

There are fewer jobs in Brazil than there are Haitians looking for work. An open-door policy intended to help migrants from the impoverished island is fueling Brazil’s largest immigration wave since World War II and prompting calls for lawmakers to do more to help the new arrivals.

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Rousseff’s austerity plan for Brazil runs into trouble with allies

Anthony Boadle and Alonso Soto – Reuters, 2/13/2015

President Dilma Rousseff’s austerity push has run into stiff opposition from her own allies in Congress that could derail her efforts to restore Brazil’s fiscal credibility and avoid a damaging credit rating downgrade.

The leftist leader’s allies, including members of her own Workers’ Party, are seeking to water down a first batch of unpopular bills that trim unemployment and pension benefits and save some 18 billion reais ($6.32 billion).

The bills are part of an austerity drive led by Finance Minister Joaquim Levy, a fiscal conservative picked by Rousseff to plug a growing public-sector deficit with spending cuts and tax hikes aimed at saving the once booming economy’s coveted investment grade.

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