Petrobras pays Brazil $508 million to settle tax dispute

Jeb Blount – Reuters, 7/17/2015

Brazil’s state-run oil company Petroleo Brasileiro SA said late Thursday it paid 1.6 billion reais ($508 million) to settle part of a tax dispute with Brazilian authorities and will take a charge against second-quarter earnings.

The payment includes 1.2 billion reais in back taxes and 400 million reais in fines and interest, Petrobras, as the company is formally known, said in a statement. The second-quarter charge, after taxes, will be 1.4 billion reais.

The payment comes after Brazil’s CARF, a tax-ajudication body in the Finance Ministry, ruled that Petrobras must pay a financial-transaction tax known as the IOF. The tax was levied on Petrobras foreign-subsidiary operations in 2008.

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France, China weigh on Carrefour second-quarter sales, Brazil resilient

Dominique Vidalon – Reuters, 7/16/2015

Carrefour (CARR.PA), Europe’s largest retailer, on Thursday reported a slowdown in second-quarter sales reflecting competitive pressure in its top French market and slumping sales in China amid weak consumption.

Sales however picked up in Spain, the group’s third-largest market, and held up well in a slowing Brazilian economy, unlike those of smaller rival Casino (CASP.PA).

Carrefour, which makes 73 percent of its sales in Europe, is seeking to seal a global revival by focusing on price and cost cuts, expansion into smaller convenience stores, while also renovating its core traditional hypermarket network to boost growth despite weak consumer spending.

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Brazil retail sales shine light on economy’s decline

JONATHAN WHEATLEY, FINANCIAL TIMES – 7/15/2015  

Another day, another disastrous data point from Brazil. The national statistics office revealed on Tuesday that retail sales fell a seasonally adjusted 0.9 per cent in May from April and by (an unadjusted) 4.5 per cent year on year.

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The figures were much worse than expected. A Bloomberg survey had predicted a 0.3 per cent month-on-month contraction in the headline figure. A look into the detail shows the extent to which Brazil’s consumer credit-driven growth model has collapsed.

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Brazil contracts more than expected in April

Financial Times, 6/19/2015

Brazil’s first quarter contraction was bad. But the second quarter is shaping up to be even worse.

The Brazilian central bank’s IBC-Br index, a preliminary indicator of GDP growth, showed that Latin America’s largest economy contracted for the sixth time in the past seven months.

Economic activity fell 0.8 per cent in April from March as successive interest rate hikes and the austerity measures implemented by Joaquim Levy, Brazil’s new market-friendly finance minister, take their toll on the economy.

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Brazil’s economy falters, but worse may be to come

Nicolas Bourcier – The Guardian, 6/9/2015

The signs that Brazil’s economy is in trouble have been visible for a while now, but the worst could be still to come. The figures published last month for gross domestic product in the first quarter of 2015 confirmed the absence of growth that has plagued Latin America’s powerhouse for the past five years.

With GDP down by 0.2% since the new year – a fall of 1.6% compared with the same period of 2014 – Brazil has registered its worst result in six years. Even if it has actually fared better than the 0.5% drop forecast by the markets, the outlook for the world’s seventh-largest economy nevertheless looks gloomy. The figures are bad enough to reduce the already limited room for manoeuvre available to the newly appointed and ever so orthodox finance minister, Joaquim Levy. Last month he announced far-reaching austerity measures, with cuts amounting to 69.7bn reals ($22.4bn), prompting an outcry from members of his own party, who want a more flexible line.

The government led by President Dilma Rousseff is expecting a 1.2% fall in GDP, higher than the 1% forecast by the International Monetary Fund. If the first forecast is right, it would be Brazil’s worst performance in the past 25 years. “Everyone was hoping that the economy would bottom out in the first quarter,” says economist Paulo Gala, “but confidence is still deteriorating, [and] the volume of road transport is plummeting, as are car sales. The recession seems to be deepening.”

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Food shock over, Brazil inflation rate declines

Kenneth Rapoza – Forbes, 5/8/2013

Declining food prices helped Brazil’s monthly inflation index fall from 6.59% to 6.49%.  It’s not great, but it’s heading in the right direction.

Food inflation services have been the main culprit behind inflation this  year, but in April it was health and personal care groups that came in stronger than forecast, printing at 0.96% on the month for healthcare and 1.3% for personal care products.  Brazilians love their Nivea and Boticario.  The good news is that daily inflation surveys are suggesting that food inflation is moving down at an even faster pace, which means 6.49% won’t be topped in May.

“We see downside risks to inflation for May,” said Guilherme Loureiro, an analyst at Barclays Capital in São Paulo. He said in a note to clients on Wednesday that a temporary downtrend in domestic inflation plus renewed concerns about the global growth outlook, Barclays is still holding out for a 25 basis point rate hike in Brazil to 8.25%. That’ll happen mid-month if their analysis is right.

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Brazil isn’t growing—so why are Brazilians so happy?

The Economist, 05/07/2013

IN THE decade after Jim O’Neill of Goldman Sachs coined the acronym “BRICs” in 2001, grouping together four big countries with the potential for sustained growth, the “B”, Brazil, really put itself on the economic map. Having grown by 2.3% a year between 1995 and 2002, it grew by 4% annually in the following eight years. But Brazil then ran out of puff. It grew by a disappointing 2.7% in 2011, and a dismal 0.9% in 2012. Yet Brazilians seem blissfully unconcerned. IPEA, a Brazilian research institute, regularly finds that two-thirds to three-quarters of families say their financial situation improved during the past year, and that they expect it to get even better in the year ahead. In December Gallup, a global pollster, found that those optimistic about the economy outnumbered pessimists by a wider margin in Brazil than in any other large economy. Given that growth has stalled, why are Brazilians so happy?

The underlying reason is that even though the country as a whole is struggling, most families’ incomes are still rising fast. Unemployment is close to record lows and pay rises are comfortably outstripping inflation, partly because of big hikes to the minimum wage, but also because of that tight jobs market. Meanwhile, the gradual weaving of a social safety-net is rescuing many Brazilians from destitution. The result is falling inequality, a growing middle class — and a disconnect between GDP growth and most Brazilians’ actual experience.

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