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.

Brazil’s Congress reconvenes, mired in pessimism

Silvio Cascione -Reuters, 02/02/16

Brazilian lawmakers return from their annual recess today with an overwhelming list of work to do as the country sinks into a broadening political, economic and health crisis.

And yet expectations about their actual capacity to make 2016 a better year than 2015 could hardly be smaller.

While there is little consensus on the measures needed to fix Brazil’s budget, deputies and senators are set to spend much of their political energy this year arguing about if and how President Dilma Rousseff should be impeached – and a whole new program of economic reforms could be started from scratch.

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UPDATE 1-Brazil 2015 budget gap hits record as austerity fails

Alonso Soto – Reuters, 01/29/2016

Jan 29 Brazil’s overall budget deficit soared to a record 613 billion reais ($150.99 billion) in 2015, central bank data showed on Friday, nearly doubling from last year as efforts to rebalance fiscal accounts failed and interest rates shot up.

The budget deficit equaled 10.34 percent of the gross domestic product, nearly five times its shortfall in the 12 months to mid-2011. The deficit mushroomed under President Dilma Rousseff, who took office at the start of 2011.

In comparison, at the height of its debt crisis in 2009 Greece had a deficit of 15.2 percent of GDP.

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Brazil’s budget hole widens in June

Paulo Trevisani – The Wall Street Journal, 7/31/2015

Brazil announced Friday another setback to government efforts to increase savings and balance its books amid a deep economic contraction.

The government posted a 9.3 billion Brazilian reais ($2.8 billion) primary deficit in June, the country’s central bank said. That compares with a primary deficit of 6.9 billion reais in May and brings the 12-month result to a 45.7 billion reais deficit, equal to 0.8% of gross domestic product. This year’s target is a surplus 0.15% of GDP.

“It is a bad result,” said João Pedro Brugger, an economist at Leme Investimentos, an asset-management firm in São Paulo. “The government will have to make additional efforts to meet its target,” something particularly difficult when the economy is weak, he said.

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Nigeria lags behind Brazil, South Africa in telecoms investment per capita

Business Day, 7/21/2014

With more than 127 million active mobile subscriptions in Nigeria, Africa’s largest economy by GDP significantly lags behind fast growing economies of Brazil and South Africa in terms of telecommunications investment per capita, industry analysts have said.

According to World Bank, Nigeria invested an estimated $6.6 billion in telecoms infrastructure from 2010 through 2012, which works out to a total of about $40 per person. Brazil, on the other hand, has a telecoms investment per capita of $167. Between 2010 and 2012, Brazil and South Africa spent about $127 and $62 more per person, respectively, on telecoms infrastructure. As at March 2014, Brazil has a mobile subscription base of 273 million.

The country has a population of 201 million people. South Africa, on the other hand, has a mobile subscription base of 59.4 million. The country has a population of about 50 million people, according to the 2013 GSM African Mobile Observatory report.

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Mantega plans 20% cut in Brazil BNDES loans to slow deficit

Adriana Arai, Marisa Castellani & Arnaldo Galvao – Bloomberg, 11/04/2013

Brazil plans to reduce lending by its development bank by about 20 percent next year to shore up finances after posting the biggest budget deficit in almost four years, fueling speculation the nation’s credit rating may be cut. Local swap rates fell.

Finance Minister Guido Mantega said in an interview that state lender BNDES will provide about 150 billion reais ($66.6 billion) in new loans in 2014, compared with an estimated 190 billion reais this year. That would bring BNDES credit a little below 2012 levels. The government will freeze BNDES lending to states and municipalities, unwind tax breaks on consumer goods and keep current expenditures under control, the minister said.

“With respect to state banks, we will reduce stimulus,” Mantega said at his Sao Paulo office on Nov. 1. Lending “will be more focused and we will reduce subsidies.”

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