Brian Winter – Vox, 05/11/2016
To many observers, Brazil appears one swarm of locusts short of a full-fledged Biblical plague. Whether it’s the off-again, on-again impeachment of President Dilma Rousseff, the country’s worst recession in 80 years (or maybe ever), the spread of the bizarre and frightening Zika virus, or its continued struggle with drug gangs and homicides, Brazil looks anything but ready to host the world at the Summer Olympics this August.
Without a doubt, it has been a terrible 2016 — and a huge letdown after Brazil’s economic boom of the 2000s, which helped it win the Olympics in the first place. But the particularly confusing nature of this crisis, paired with the convergence of the world’s media hordes on Rio de Janeiro, has also produced a truly epic amount of misinformation, stereotypes, and wishful thinking.
So, in the spirit of better understanding the Land of Samba and Surf (oops, a stereotype!), and trying to gauge where the political and economic crisis might be headed next, here are three common myths about Brazil’s current crisis. The myths themselves are revealing in what they say about the country’s image — among locals and rubbernecking visitors alike.
David Biller – Bloomberg, 05/06/2016
Brazil’s consumer inflation accelerated more than all analysts forecast in April, pushing the market to temper bets the central bank will lower interest rates.
The benchmark IPCA consumer price index climbed 0.61 percent after a 0.43 percent rise the previous month. That was more than the median forecast for a 0.54 percent increase from 44 economists surveyed by Bloomberg. Twelve-month inflation slowed to 9.28 percent.
Annual inflation at more than double the official target has hurt the confidence of Brazilians whose salaries don’t stretch as far as they once did. Making matters worse, the nation is confronting double-digit unemployment and the prospect of a second year of recession. Many believe the scope of the downturn will provide the central bank room to lower its benchmark interest rate from a near 10-year high.
Eduardo Porter – The New York Times, 05/03/3016
Not too long ago, Brazilians might have been counted as the most optimistic people in the world. From 2008 to 2013, as the United States and Europe grappled with the aftermath of a crisis wrought by blind trust in unfettered finance, Brazil’s income per person grew 12 percent after inflation. Wages soared. The poverty rate plummeted. Even income inequality narrowed.
Brazil remained only a high-middle-income country, in the technospeak of the International Monetary Fund. But for the first time in forever, the eternal “country of tomorrow,” as Brazilians often ruefully described their nation, saw itself instead as a rampant member of the emerging cohort ofBRICS (Brazil, Russia, India, China and South Africa) — maybe even closer than China to making the jump into the ranks of the world’s richest nations.
And then it didn’t happen.
Anthony Pereira – CNN, 06/03/2013
When former Goldman Sach’s economist Jim O’Neill first went to Brazil after coining the acronym BRIC, someone asked him whether he had included the “B” just to make the name sound good.
Such skepticism is becoming common again, as investors compare the projected rate of growth in Brazil this year — just 3% — to that in China and India, around 8% and 6% respectively.
So does Brazil still deserve to be seen as an economic powerhouse?
Brian Winters – Reuters, 05/24/2013
Just two years ago, Brazil was still hailed as “The Near China” – an economy that offered East Asia-style 7-percent growth rates in a seductive, sun-kissed package that was closer to home for western investors.
Today, the thrill is gone.
Economic growth limped in at less than 1 percent last year, 2013 is looking pretty mediocre, and words like “facade” and “bubble” are being used to describe Brazil by some in the international press.
Joe Leahy – Financial Times, 04/21/2013
In 2010, when 60 Minutes came to Brazil to do a piece on the “World’s Next Economic Superpower”, the US television programme chose Eike Batista as the ambassador for the country.
“You know, in the last 16 years, Brazil has put its act together. This is it. Hello, time for Americans to wake up,” Mr Batista said with trademark brashness.
In retrospect, the discovery by primetime TV of Brazil’s economy should itself have been a sell signal for investors that a long boom in Latin America’s biggest economy, fuelled by high commodity prices and credit, was peaking.
Rodrigo Orihuela, Boris Korby – Bloomberg, 02/25/2013
Bondholders are increasing pressure on Brazilian billionaire Eike Batista to raise outside money for his oil producer, pushing up borrowing costs to levels associated with companies on the verge of collapse.
After surging to more than 11.6 percent last week, yields on $2.56 billion of notes due 2018 issued by OGX Petroleo & Gas Participacoes SA ended Feb. 22 at 11.06 percent following a report by Sao Paulo-based newspaper Valor Economico that Batista is in talks to sell a stake in OGX to Malaysia’s state energy company. Company officials declined to comment on the report.
OGX’s cash hoard dropped 23 percent in the six months through September to 5.1 billion reais ($2.56 billion) as subpar production at its first two oil wells put output goals out of reach. Bonds of OGX, which will run out of cash in less than two years at its current burn rate, have suffered even after Batista said in October that he would pump $1 billion of his own money into the company that he founded in 2007.