Dilma Rousseff, facing impeachment in Brazil, has alienated many allies

Andrew Jacobs – The New York Times, 05/01/2016

BRASÍLIA — They were idealists, united in the struggle against Brazil’s military dictators.

As democracy flourished, so did their careers. One of them, Paulo Ziulkoski, became the leader of an association of Brazilian cities. The other, Dilma Rousseff, rose even higher, becoming the president of Latin America’s largest country.

But their friendship soon fell apart. During a contentious meeting with the nation’s mayors in 2012, Ms. Rousseff rejected pleas for a share of Brazil’s soaring oil revenues. After the room erupted in jeers, Mr. Ziulkoski said, she stormed up to him, poked a finger in his face and humiliated him with a string of expletives.

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Is Brazil giving up on growth?

Kenneth Rapoza – Forbes, 04/25/2016

Inflation is down nearly 100 basis points from a few months ago, but the Central Bank of Brazil has no intention of lowering interest rates. Investors should take this coming Wednesday’s meeting as a cue whether or not there is a growth strategy anywhere in Brasilia.

Nomura Securities said that they are forecasting the Bank to keep rates at 14.25% even though inflation is coming down. Brazil’s rolling 12-month inflation was as high as 10.7% in January. It’s currently 9.4%. Nomura has close ties to Brazil’s central bank and is good gauge of which way the wind is blowing on the monetary policy committee.

Brazil’s economy, expected to contract by around 3.5% again this year, is facing a massive political crisis. It would be good if the central bank could be more independent and cut rates to boost growth. On the other hand, sentiment among Brazil’s business class is so burned out with the twin crises of politics and economics that it is going to take more than a rate hike to improve things.

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Brazil’s economic activity unexpectedly shrinks in January

Walter Brandimarte – Bloomberg Business, 03/1/2016

Brazil’s economic activity unexpectedly contracted in the beginning of 2016 and economists forecast a deeper recession for this year as a political stalemate nearly paralyzes the country.

The central bank’s IBC-BR index, which is often taken as a proxy for Brazil’s GDP report, shrank 0.61 percent in January, more than forecast by all 25 economists surveyed by Bloomberg, whose median estimate was for a 0.2 percent expansion. Economic activity as measured by the index has been declining for 11 consecutive months and, with Monday’s negative surprise, some economists are already cutting their forecasts for Brazil’s economic performance this year.

Among those, Goldman Sachs revised its 2016 forecast for the IBC-BR to a deeper contraction of 3.6 percent from 3.2 percent. “We expect the economy to continue to face strong headwinds,” the bank’s senior economist Alberto Ramos wrote in a note to client, citing a long list of obstacles including tight financing conditions, high inflation, rising unemployment, and political uncertainty.

Exports from China to Brazil collapse as recession deepens

Joe Leahy – Financial Times, 02/25/2016

Chinese exports to Brazil collapsed last month in the latest dramatic sign of the deepening recession in Latin America’s biggest economy.

Containerised exports from China to Brazil of goods ranging from automotives to textiles fell 60 per cent in January compared with a year earlier as the weak real limits Brazilians’ ability to buy imported goods, according to Maersk Line, the world’s largest shipping company. Total volume of containerised imports into Latin America’s biggest economy halved, data showed.

“What we are seeing right now from China is not only a phenomenon for Brazil, we are seeing the same all over Latin America, declining [Chinese export] volumes into all the markets,” said Antonio Dominguez, managing director for Maersk Line in Brazil, Paraguay, Uruguay and Argentina. “It has been going on for several quarters but is getting more evident as we move into [2016].”

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Brazil Real gains as China measures support commodity producers

Paula Sambo – Bloomberg, 9/9/2015

Brazil’s real climbed to a one-week high as efforts by China to add to growth triggered a bounce in the prices of raw materials.

“There is scope for emerging-market currencies such as the real to strengthen given the improvement in risk sentiment,” Mark McCormick, a foreign-exchange strategist at Credit Agricole SA, said from New York.

The local currency advanced after China, Brazil’s largest trading partner, pledged to accelerate construction of some major projects and reduce companies’ tax burdens. The real also gained as President Dilma Rousseff’s administration was said to be studying a tax increase on Brazil’s top earners to raise revenue and narrow an expanding budget deficit.

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Brazil needs to reverse course to revive economy

Mark Weisbrot – AlJazeera America, 8/7/2015

Luíz Inácio “Lula” da Silva won the presidency of Brazil on his fourth attempt, in an overwhelming victory in October 2002. His Workers’ Party (PT) ushered in a new era for the country’s previously disenfranchised majority, with the economy from 2004 to 2010 more than doubling its rate of growth of the previous 23 years. Poverty declined by 55 percent and extreme poverty by 65 percent from 2003 to 2012. Unemployment hit record lows, the real (inflation adjusted) minimum wage doubled, and the gains from growth were more equally distributed than in previous decades.

A large majority of Brazilians are still vastly better off today than they were before the PT came to power. But the economy slowed sharply from 2011 to 2014, with GDP growth returning to the rates of the pre-PT era. Job creation in the formal sector — regular employment covered by taxes and legal benefits, as opposed to the underground economy — fell from an average of 1.46 million jobs annually for 2004 through 2010 to just 829,000 for 2011 to 2014 and just 152,000 in 2014. Economic growth was about zero last year and will turn negative this year.

Approval ratings for Lula’s successor, Dilma Rousseff, have plummeted, and most of the news about Brazil is woefully pessimistic — corruption scandals, including one involving the state-run oil company, Petrobras; Standard and Poor’s lowering its outlook for the country’s bond rating after downgrading it to one notch above junk; the real falling about 35 percent against the U.S. dollar over the past year.

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Brazil real drops on concern Rousseff will lower budget target

Paula Sambo – Bloomberg Business, 7/13/2015

Brazil’s real fell from a one-week high as speculation that political tension will force President Dilma Rousseff’s administration to compromise on the budget cast doubt on her commitment to preserve the nation’s credit rating.

The currency extended its drop in July to 2.1 percent as lawmakers pushed back against her move to narrow government deficits. Concern mounted after the Brazilian newspapers Estado and Folha de S. Paulo reported that Rousseff will discuss a reduction in the fiscal target at a meeting Monday.

“While Rousseff’s effort to solidify the fiscal base is positive, the course of discussions and political barriers may trigger short-term volatility in the financial markets,” Ipek Ozkardeskaya, an analyst at London Capital Group, said in an e-mailed response to questions.

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