Archive for the ‘Brazil’ Category

Forget Brazil. This emerging market is on the rise

| March 27th, 2015 | No Comments »

By Elizabeth MacBride

Brazil, an emerging-market darling just a couple years ago, is crumbling amid economic stagnation and political turmoil. But there’s a far brighter story—one most investors are missing—elsewhere in Latin America.

Four countries—Mexico, Peru, Colombia and Chile—three years ago formed a free-trade bloc called the Pacific Alliance. Tiny Costa Rica joined the club in 2013. Together, they’re a bigger economy than Brazil, and they’re expected to grow three or four times faster than their huge neighbor over the next few years.

Brazil’s $1.7 trillion economy contracted by 0.1 percent in 2014, according to Brazilian central bank data released Thursday, and it’s seen shrinking by 0.5 percent 2015. A corruption scandal at state-controlled Petrobras, the state-controlled petroleum giant, is expected to further hobble the country’s economy.

Pacific LatAm rising Country Population GDP past 5 years Predicted 2014/2015 Mexico 115 Million 1.90% 2.4%/3.5% Colombia 47 Million 4.20% 4.8%/4.5% Peru 30 Million 5.50% 3.6%/5.1% Chile 17 Million 4% 2.0%/3.3% Costa Rica 5 Million 3.10% 3.6%/3.6%

In contrast, the five Pacific Alliance members, with a collective GDP of $2.2 trillion, are expected to grow 3.3 percent in 2014, and 4 percent in 2015. ... Read More

Dealing with Dilma

| March 27th, 2015 | No Comments »
The Economist

She is less than three months into her second term, but already most Brazilians want to see the back of Dilma Rousseff. Grappling with a sickly economy and a hydra-headed corruption scandal at Petrobras, the state-controlled oil giant, she finds herself almost friendless in Brasília. She has already lost control of a Congress where, in theory, her coalition has a comfortable majority. More than 1m Brazilians took to the streets on March 15th to repudiate their president. Her approval rating has fallen by 30 points in six months to 13%, the lowest for a Brazilian president since Fernando Collor in 1992, on the eve of his impeachment for corruption.

Nearly 60% of respondents in one poll believe that Ms Rousseff merits the same fate. It is not hard to see why voters are angry. She chaired Petrobras’s board in 2003-10, when prosecutors believe more than $800m was ... Read More

Brazil’s Economy Expected to Shrink in 2015, as Joblessness Rises in February

| March 27th, 2015 | No Comments »
Wall Street Journal WSJ-01


SÃO PAULO—Embattled Brazilian President Dilma Rousseff received more bad news about the economy on Thursday, with one government report showing rising unemployment and another forecasting slower growth and faster inflation.

Brazil’s jobless rate rose to 5.9% in February, the highest in almost two years, according to the country’s statistics agency. Meanwhile, the central bank estimated gross domestic product shrank 0.1% in 2014 and forecast a contraction of 0.5% for this year, while revising its forecast for the 2015 inflation rate upward to 7.9%.

The central bank’s negative view is likely to be reinforced on Friday, when the statistics agency releases the country’s official GDP report for the fourth quarter and full year 2014. Economists expect the statistics agency to report that GDP last year didn’t grow from the previous year.

The numbers come just as Ms. Rousseff is facing resistance from her allies in Brazil’s Congress to her government’s proposals for economic ... Read More


| March 26th, 2015 | No Comments »

WASHINGTON, DC — The Iran-backed Lebanese terror group Hezbollah is among the terrorist organizations that are benefiting from the illegal drug trade in Latin America, Lt. Gen. Kenneth Tovo, deputy commander of the U.S. Southern Command (Southcom), told lawmakers.

Illegal drug trafficking in Latin American generates at least “tens of millions” for Hezbollah, which uses the funds to fuel its operations in the Middle East, explained the Southcom general.

During a hearing this afternoon held by the Senate Homeland Security & Government Affairs Committee, Ron Johnson (R-WI), the panel’s chairman, asked the general to comment on the nexus between drug traffickers and terrorist organizations in Latin America.

“Mr. Chairman certainly in a classified setting we can give you a lot more detail. Suffice it to say from open source, I think we know that in at least several occasions over the past decade and a half, terrorists have attempted ... Read More

Cleaning up Latin American democracy

| March 26th, 2015 | No Comments »
The Economist

During the multitudinous demonstration against Brazil’s president, Dilma Rousseff, in São Paulo on March 15th, a lunatic fringe chanted for a return to military rule. That was sad more than worrying. The rightists were shouted down. Their isolation served to underline how routine democracy has become in many Latin American countries in the third of a century or so since the generals returned to barracks.

That outcome was not inevitable. Compared with Europe or North America, democracy in Latin America must struggle against big obstacles, including poverty, gaping income inequality and corruption. Another is poor institutional design. Latin America combines directly elected presidents, as in the United States, with multiparty legislatures chosen by proportional representation, in the manner of many European parliamentary systems. The result has often been gridlock: weak governments have lacked majorities in legislatures unthreatened by dissolution, which induces consensus in parliamentary regimes.

These ... Read More

Brazilian Real Drops as Central Bank Plans to Pare Back Support

| March 26th, 2015 | No Comments »

By Paula Sambo

(Bloomberg) — Brazil’s real dropped after the central bank said it will scale back support for the currency.

The real lost 2 percent to 3.2010 per dollar in Sao Paulo trading, extending its run as the worst performing major currency this year. It has lost 17 percent against the dollar in 2015 on concern that weakening fiscal accounts will cause the country to lose its investment-grade credit rating.

Officials at the end of this month will stop swap auctions that had bolstered the currency, the central bank said in a statement Tuesday. The monetary authority will continue rolling over old contracts, which are equivalent to selling dollars in the futures market, and may still hold auctions for dollar loans.

“The end of the swaps program might sour investors’ appetite for the currency,” Deives Ribeiro, a foreign-exchange manager at Fair Corretora de ... Read More

After S&P Ratings Reprieve, Brazil Faces Some Tough Economic News

| March 25th, 2015 | No Comments »
Wall Street Journal WSJ-01


SÃO PAULO—President Dilma Rousseff got a big break on Monday night when Standard & Poor’s Ratings Services maintained Brazil’s investment-grade credit rating, but Friday’s coming report on economic growth is expected to bring the embattled president more bad news.

Ms. Rousseff, who was re-elected last October, has seen her approval rating plummet, as the stagnant economy, her government’s efforts to raise taxes and cut spending and a corruption scandal at state-controlled oil company Petroleo Brasileiro SA have undercut her standing with voters.

The kickbacks-and-bribery scandal at Petrobras is weighing on the Brazilian economy, S&P analysts said in a conference call on Tuesday. Earlier this week, S&P lowered its outlook for the oil company, but held back from downgrading its credit rating. Last month, Moody’s Investors Service downgraded Petrobras’ debt to junk status.

Petrobras is an investment powerhouse which traditionally has been responsible for about 10% of total annual business investment in the country. But the scandal has ... Read More

Democracy, Brazil Style

| March 23rd, 2015 | No Comments »
Foreign Affairs

By Kathryn Hochstetler

Earlier this month, the streets of Brazil’s major cities filled with protestors. Timed to the 30-year anniversary of the end of military rule in 1985, the March 15 protests were probably the largest since Brazil became a democracy and were certainly larger than the widely reported demonstrations of June 2013. Yet real numbers are hard to come by. Protests were clearly biggest in the city of São Paulo, but estimates of the size of the crowd gathered there range from 210,000 (Instituto Datafolha, which is linked to the Folha de São Paulonewspaper) to over a million (the state-controlled military police). If the lower estimate is correct, some hundreds of thousands of people came out onto the streets across the country. If the higher estimate is right, the total would be around 1.7 million people.

The size matters; those who marched had a harsh message for ... Read More

Brazil’s fall from grace of its own making

| March 23rd, 2015 | No Comments »
Financial Times

Brazil is in crisis. Earlier this month, more than 1m protesters took to the streets to voice their discontent. Much of the country suffers water rationing following a long drought. Petrobras is engulfed in an epic corruption scandal that saw up to $10bn embezzled from the oil company. The economy is likely to shrink this year and perhaps next year as well, which would be its worst performance since 1931. Approval ratings for Dilma Rousseff, the president, have slid to 13 per cent, the lowest on record. It seems only yesterday that the country was feted as the new best thing. So its fall from grace has been spectacular. Sadly, the situation is likely to get worse still. The central question is whether Brazil’s institutions hold as it does.

A large part of the blame lies with Brazil itself. For much of the 2000s, it enjoyed an unprecedented commodity boom. This bolstered its terms ... Read More

After massive demonstrations against her, Dilma Rousseff will struggle to relaunch her presidency

| March 20th, 2015 | No Comments »
The Economist

Dilma Rousseff, Brazil’s president, expected the anti-government protests on March 15th to be big. She convened a meeting of a crisis group at her official residence to monitor them. But nobody, including the organisers, imagined they would be as massive as they turned out to be. Police in São Paulo put the size of the crowd on Avenida Paulista, the preferred venue for such gatherings, at more than 1m; Datafolha, a pollster, counted 210,000. Either way, it was the biggest political demonstration in the country’s biggest city since the diretas já (“elections now”) movement that helped end military rule in 1985. Overall, police estimated that 2.2m people turned out in dozens of cities across all 27 states. That dwarfs the number who took to the streets on any single day in June 2013, the most recent occasion when Brazilians vented their anger at politicians en masse.

Trade unions, which ... Read More

Brazil’s President Dilma Ready For Economic Reboot

| March 19th, 2015 | No Comments »


If there is one thing people can agree on about Brazilian president Dilma Rousseff it is that she is stubborn. But after a weekend of protests, with some calling for her impeachment, Dilma admits she’s not infallible.

Even though the hundreds of thousands of Brazilians that took to the streets Sunday were mainly protesting against corruption, one of the things Dilma addressed on Monday was her economy.  She said she “might have overdosed” on economic measures during her first term. It was a more like a half-confession, but a notable one. Dilma is ready to do things differently.

Her overdose had its merits. Most of it was the handiwork of Guido Mantega, the Finance Minister who fought a brave fight in the currency war. That was when a weak dollar was making the Brazilian real too strong. China was busy with its soft landing. ... Read More

Brazilian Opposition Urges Probe of Rousseff

| March 19th, 2015 | No Comments »
Wall Street Journal WSJ-01


BRASÍLIA—Political opponents of Brazil’s President Dilma Rousseff are pressuring authorities to investigate her in connection with a widening corruption scandal that has sunk her approval ratings and threatens to engulf her government.

Opposition leaders are asking Brazil’s Supreme Court to give the green light to prosecutors to determine whether the president played a role in a ring that allegedly looted millions of dollars from state-controlled oil giant Petróleo Brasileiro SA and funneled bribes to politicians.

Ms. Rousseff has repeatedly denied knowledge of the alleged scam and hasn’t been implicated. Brazil’s Supreme Court, which must authorize probes of high-ranking politicians, didn’t include her this month on a list of 48 lawmakers to be investigatedin the scandal, dubbed “Operation Car Wash.” Suspects who cut plea deals have told prosecutors the bribe payments were diverted to her campaign, according to transcripts. But prosecutors and the Supreme Court concluded that there wasn’t enough evidence to justify a probe of Ms. ... Read More

The big picture behind Brazil’s protests

| March 18th, 2015 | No Comments »
From CNN

Over a million Brazilians protested in the streets Sunday, calling for the impeachment of President Dilma Rousseff.

A massive corruption case involving the president helped spark the protests, but Brazilians also marched out of frustration that Brazil’s economic boom is over.

South America’s largest economy was last decade’s emerging market darling. Now it’s edging toward recession and its currency is losing value quickly. The corruption scandal and economic collapse are creating a perfect storm for public unrest.

Commodity crisis: Brazil is the world’s largest producer of sugar, coffee, soybeans and near the top in iron ore and oil. Despite a rising middle class, Brazil is still a commodities export economy.

Its biggest trading partner is China, which is slowing down right now. That’s decreasing demand for Brazil’s goods, causing prices to tank.

Sugar prices are down 24% from a year ago. Coffee is down 29% to $1.35 per pound. Soybeans — you guessed it ... Read More

One million join anti-Rousseff protests in Brazil

| March 16th, 2015 | No Comments »
Financial Times

By Samantha Pearson and Aline Rocha in São Paulo

More than a million protesters took to the streets of Brazil on Sunday to call for the impeachment of President Dilma Rousseff, as anger intensifies over increasing economic hardship and the multibillion-dollar corruption scandal at state oil company Petrobras.

Tens of thousands of demonstrators swarmed around ministerial buildings in the capital Brasília, along Copacabana beach in Rio de Janeiro, and other major cities across at least 25 of Brazil’s 26 states. More than 1m people protested in São Paulo alone — equivalent to one in 20 people in the city’s greater metropolitan region, according to military police.

Families, the elderly and activist groups — many dressed in Brazil’s national green and yellow colours — waved flags and balloons, held up banners against the government and sung the national anthem in what was largely a peaceful protest.

“Dilma and her PT party have taken away any pride ... Read More

Brazil Protests Signal Return of Risk in Region as Boom Fades

| March 13th, 2015 | No Comments »


From pot-banging on the streets to defeats in Congress, Brazil’s President Dilma Rousseff hasn’t had a good week defending austerity measures she hopes will fix a broken economy. And it’s about to get worse.

Brazilians in several cities plan to demonstrate on Sunday against corruption and growing economic hardship, demanding Rousseff’s impeachment. More than a quarter of a million people signed up on social media to participate. On Friday, pro-government unions intend to protest labor and pension cuts.

Brazil is one of several Latin American countries where a cocktail of corruption scandals, slowing growth, falling currencies and accelerating inflation is eroding leaders’ popularity as a decade-long commodities boom comes to an end, said Joao Augusto de Castro Neves, Latin America analyst at Eurasia Group. It’s a hard time for Rousseff to be pushing through an austerity package.

“Political risk in Latin America is again on ... Read More

Why Brazil’s President Dilma Rousseff Is Failing

| March 12th, 2015 | No Comments »

By Anderson Antunes

Brazil’s President Dilma Rousseff is not someone who appreciates criticism. She is, by her own words, “a harsh woman, sometimes surrounded by mild men.” What many foreigners don’t know is that Rousseff spent three years behind bars in the early 1970s for fighting against Brazil’s dictatorship, a time during which she was repeatedly tortured by interrogators with electric shock to her feet and ears, and forced into the “pau de arara,” or parrot’s perch, a beam from which she was hung upside down naked, with bound wrists and ankles.

Rousseff went through all of that for an ideal — her love and confidence in Brazil — and also for believing that those in charge of the country at the time were damaging its future. But love and conviction have never protected anyone against the inconstancy of fate. So today Rousseff has found herself in a position where her actions, ... Read More

Brazil’s Crash Landing: Corruption Engulfs Petrobras Amid Economic Contraction And Rising Inflation

| March 11th, 2015 | No Comments »


Not too long ago, Brazilian regulators were forced to levy a tax on capital inflows to stem the rising value of the real, as foreign investors flocked to the South American giant that had become a paradise of investment in the aftermath of the global financial crisis that left the rich countries of the world on their knees. Today, Brazil faces the specter of a protracted recession amid the highest inflation measurements in nearly a decade and an extensive corruption scandal involving Petrobras that threatens to permeate President Dilma Rousseff’s second and last term. The unraveling of Brazil is made even more explicit by the case of Eike Batista, once the country’s richest man and now under investigation for insider trading, who found the Judge responsible for the case driving his seized Porsche Cayenne. He was also stashing Batista’s son’s Range Rover and a luxury piano at his apartment complex. ... Read More

Brazil’s Dilma Rousseff Defends Austerity Measures in TV Address

| March 10th, 2015 | No Comments »
Wall Street Journal WSJ-01


BRASÍLIA—Brazilian President Dilma Rousseff defended her government’s unpopular austerity measures as necessary to resume growth in a televised address Sunday, while putting most of the blame for the nation’s economic woes on forces beyond her control.

Her administration has promised to replenish the government’s coffers this year, as Brazil faces the risk of a credit downgrade to junk status, negative growth and high inflation. The austerity effort was launched late last year, after Ms. Rousseff narrowly won a second term that started in January.

“The measures are meant to restructure our accounts and continue the process of growth,” she said in the speech.

“You who are a housewife or the father of a family know what this is…Sometimes we have to rein in expenses to keep our budget from going out of control…to ensure our future,” she said. The speech was her first on national television since her Jan. 1 inauguration.

Finance Minister Joaquim ... Read More

Top Brazilian politicians investigated in Petrobras scandal

| March 9th, 2015 | No Comments »
Swiss Info

By Anthony Boadle

BRASILIA (Reuters) – Brazil’s Supreme Court will investigate the speakers of both houses of Congress and 32 other sitting politicians in connection with a multibillion-dollar kickback scheme at state-controlled oil company Petrobras.

The scandal has shaken the political establishment and undermined support for President Dilma Rousseff, who was narrowly re-elected last year and is struggling to stave off an economic recession and a downgrade by credit rating agencies.

A court official said on Friday that 12 senators and 22 congressmen from five parties are under investigation, all but one from Rousseff’s governing coalition. The most prominent are the president of the Senate, Renan Calheiros, and the Speaker of the Chamber of Deputies, Eduardo Cunha, both of the PMDB, Brazil’s largest party and Rousseff’s main coalition ally.

The Progressive Party has 21 members under investigation, the PMDB six and the Workers’ Party ... Read More

Brazil raises interest rates to 12.75% to curb inflation

| March 6th, 2015 | No Comments »

Brazil’s central bank has lifted interest rates to a six-year high of 12.75% to restrain inflation.Inflation in Brazil, Latin America’s largest economy, was at a 12-year high in February of 7.4%. The government’s target is 6.5%.

Brazil’s economy had been one of the world’s fastest growing, but looks to have stalled in 2014.

Economists are now predicting that the economy will contract by more than 0.5% this year.

In a statement, Brazil’s central bank said: “In assessing the macroeconomic scenario and the outlook for inflation, the Copom [the bank's monetary policy committee] decided unanimously to raise the rate by 0.5 percentage points, to 12.75%.”

Tax move

On Wednesday, official figures showed industrial production in Brazil fell 5.2% in January compared with last year.

Brazil, once one of the fast-growing Bric economies that also include Russia, India and China, is struggling as demand for its commodities slows.

The country’s president, Dilma Rousseff, is trying to force through measures ... Read More

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