Olympics meant to showcase Brazil’s emergence, now spotlight its collapse

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.

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Businesses Signal Approval of Brazil Leadership Change

Rogerio Jelmayer – The Wall Street Journal, 05/12/2016

Businesses and investors are cheering the new leadership in Brazil following the suspension of President Dilma Rousseff, who many blame for a deep recession and crumbling finances in Latin America’s largest economy.

Vice President Michel Temer, who officially will replace Ms. Rousseff later Thursday as she steps down to face an impeachment trial, is expected to quickly propose measures to cut spending and rein in entitlements.

Mr. Temer could reduce the number of government ministries — more than 30 exist now — and the potential leader of his economic team is looking to tame budget deficits. These measures aim to shrink a massive budget deficit and restore investor confidence.

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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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Barclays Retreats from Asia, Brazil and Russia

Martin Arnold, Don Weinland – The Financial Times, 01/21/2016

Barclays has told staff it aims to remain a “bulge-bracket investment bank” while outlining plans to cut up to 1,200 staff by closing many operations in Asia, Brazil and Russia and exiting precious metals trading.

Tom King, head of Barclays’ investment bank, said in a memo seen by the Financial Times: “By focusing our business on areas where we have sustainable competitive advantage, we are putting ourselves in a position where we cannot just survive but thrive in a dynamic, complex operating environment.”
The retrenchment comes as many of the world’s biggest investment banks are cutting staff and pulling out of non-core countries in response to growing pressure from regulators and declines in fixed income trading.

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Brazil’s Real Weakens After Central Bank Abandons Rate Increase

Paula Sambo – Bloomberg Business, 01/21/2016

Brazil’s real sank to a four-month low and traders priced in faster inflation after the central bank surprised economists by keeping interest rates unchanged even with consumer-price increases running at more than twice the target.

Policy makers said in a statement accompanying Wednesday’s decision that the global economic outlook was increasingly uncertain, signaling they’re prioritizing economic growth over taming consumer-price increases. Central bank President Alexandre Tombini, in an unusual statement released Tuesday, said he would take into account the International Monetary Fund’s forecast for a deeper recession in Brazil this year.

While forecasts for Brazil’s deepest and longest recession in more than a century could justify a decision to keep interest rates unchanged, the central bank didn’t communicate its strategy clearly in the weeks leading up to the meeting, said Nicholas Spiro, a London-based managing director at Spiro Sovereign Strategy. The decision to hold interest rates at 14.25 percent, when most economists expected an increase, stokes concern that it’s susceptible to political influence.

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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’s Unpromising New Year

Paulo Sotero – The Huffington Post, 12/28/2015

A president fighting impeachment names a finance minister not trusted by markets as Brazilians, dismayed by the country’s politics, prepare for more hardship in 2016.

The debilitating political and economic crisis that engulfed Brazil in 2015 is bound to continue, regardless of the outcome of the opposition effort to impeach a discredited President Dilma Rousseff. The impeachment process started in early December is expected to drag on for months. Procedural wins by the president at the Supreme Court before Christmas dissipated a sense of inevitability of her removal from office, but did not improve her chances of regaining credibility to govern in the three years remaining in her second term. The political battle that paralyzed the congressional agenda in 2015 will deepen, undermining efforts to address the growing fiscal and structural problems that turned Brazil from a once promising emerging economy into an economic disaster in the first year of Rousseff’s second term.

The negative outlook was reinforced as the year ended by the departure of Finance minister Joaquim Levy, a fiscal conservative Rousseff named after her narrow reelection in October 2014 to rebalance the nation’s fiscal accounts and restore investors’ confidence. “It looks like the government is afraid of the reforms,” a frustrated Levy said in an exit interview.

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