Mexico’s star wanes as reforms underwhelm, Brazil rises

Michale O’Boyle and Bruno Federowski – Reuters, 07/13/2016

Foreign investors in Latin America are warming to Brazil as a promising turnaround bet while souring on Mexico and its landmark energy reform that has yet to deliver.

Brazil has yet to recover from its worst recession in decades, inflation and interest rates remain among the highest in the region and it is saddled with a bloated public sector. In contrast, Mexico’s economy is growing at around 2 percent, has lower fiscal deficits and sounder public finances.

But while Brazil interim president Michel Temer’s reform agenda offers some promise, Mexico, once a darling of foreign investors, is now a source of disappointment. A slump in oil prices dashed hopes that President Enrique Pena Nieto’s energy sector opening in 2013 along with telecoms and banking reforms would boost foreign investment and supercharge growth while clouds are now gathering over its budget and economy.

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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 economists forecast 2013 growth below 3% for first time

Raymond Colitt – Bloomberg, 05/20/2013

Brazil’s economy will grow below 3 percent in 2013, economists predicted for the first time in a central bank survey of about 100 analysts published today.

Latin America’s largest economy will grow 2.98 percent this year, down from the previous week’s projection of 3 percent. It would be the first time in a decade that Brazil grows below 3 percent for three consecutive years.

Brazil’s economy has struggled to recover from last year’s expansion of 0.9 percent as accelerating inflation undermines consumer demand. While economists raised their 12-month inflation forecast to 5.64 percent from 5.57 percent, they maintained their projection for inflation this year and next at 5.8 percent, according to the survey.

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Brazil manufacturing 2012: out with a bang

Jonathan Wheatley – Financial Times, 01/02/2013

PMI Wednesday rolls on and has reached Brazil, where the HSBC / Markit index was 51.1 in December, lower than November’s 52.2 but still comfortably inside positive territory. It’s an encouraging end to 2012 after a dismal performance for the wider economy, where growth is expected to be less than 1 per cent for the year.

Few people expect this year to be as bad as last for Brazil, so it should be no surprise that purchasing managers have been getting busy in expectation of rising demand – GDP growth will be 3.3 per cent in 2013, according to the central bank’s weekly survey of market economists.

Nevertheless, it’s good to see manufacturing industry taking a positive view on the year ahead. Brazil’s government has been taking steps that businesses have long called for, by privatising some airports, for example, and cutting electricity charges across the economy.

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Brazil Auto Manufacturers Hold to 5% Sales-Growth Forecast

Wall Street Journal, 8/6/2012

SAO PAULO–A surge in domestic sales in July has raised hopes among Brazil’s motor-vehicle manufacturers for a solid second-half performance, with the industry’s trade group holding to its 2012 forecast of a 5% rise in overall sales.

At a news conference Monday, the president of the National Motor Vehicle Manufacturers Association, Cledorvino Belini, said, “The Brazilian economy is going to post solid growth in the second half of the year. Interest rates will continue to decline, and credit will continue to expand.”

Earlier Monday, the association released July sales figures for motor vehicles. Although the year-to-date figure for sales of 2.081 million units was up only 1.8% from the same period of 2011, July showed a stunning 18.9% rise over July of 2011, to 364,196 units.

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Why Brazil must try harder

Martin Wolf – Financial Times, 06/28/2010

Brazil is the country of the future – and always will be. So goes an old joke. But is it a joke on the world at last? Has Brazil – anointed by Goldman Sachs as the B in Brics – at last become a country of the present?

The answer is yes, but only up to a point. Brazil is still a long way from matching the performance of India and China. It can, and should, do far better.

Brazil’s great achievements of the past decade and a half are those of stability – political and economic. Under the presidencies of Fernando Henrique Cardoso (1995-2003) and Luiz Inácio Lula da Silva (2003-), it has achieved stable democratic rule. The era of military rule, which ended in 1985, seems distant; so, too, do the days of inflation, which peaked at an annual rate of 2,950 per cent in 1990.

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Lula and the Brazilian moment

Jorge Heine- The Hindu, 05/06/2010

Instead of caving in to the so-called imperatives of globalisation, as so many other developing nations have done, Lula has led Brazil to assert its autonomy and independence.

Time magazine has just named President Luiz Inacio Lula da Silva the world’s most influential leader. Barack Obama is ranked fourth. Prime Minister Manmohan Singh is 19th (there are only four heads of state or government in the list). This is an exercise somewhat different from the traditional “Person of the Year” selection Time engages in each December, but highly revealing nonetheless. It is defined as “not about the influence of power, but about the power of influence.” Time has never selected a Latin American leader as person of the year. In India, Mahatma Gandhi made it in 1930.

Brazil, once known as “the country of the future” that would always remain as such, has come a long way. That this should happen at the close of the eight-year presidency of the leader of the Brazilian Workers party (the PT, Partido dos Trabalhadores), whose very election prospects in 2002 led to a run on the real, the Brazilian currency, and BOVESPA, the Sao Paulo stock market, is striking.

What is the secret of Lula and Brazil’s success? How come a country best known until 20 years ago for its runaway inflation and rollercoaster economy has made it its present condition an investors’ darling, that applies highly effective social policies, and that has positioned itself as a veto player in international affairs, one without whose acquiescence no major global initiative is viable?

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Business of beauty is turning heads in Brazil

Jonathan Wheatley-Financial Times, 1/20/10

At his hair salon in Paraisópolis, one of São Paulo’s biggest favelas , Valderan Souza is ebullient about the current state of his market.

His turnover, he says, has risen by 80 per cent over the past three years. “I would never leave here,” he says. “There are so many customers.”

Mr Souza used to work in a luxury salon in one of São Paulo’s smartest shopping centres, but he says he can make much more money in Paraisópolis.

Brazil’s favelas , or shantytowns, used to be ghettos for the poorest of the urban poor. Living conditions are often still tough but the favelas are also home to many of Brazil’s new consumers, more than 20m of whom have emerged from poverty over the past six years.

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