News from Brazil

Business & Economy

In Brazil on January 7, 2011 at 1:37 pm

ECONOMY

The growth acceleration program, or PAC (Aceleração do Crescimento), was introduced in 2007 and laid out investment plans of nearly R$504 billion (US$306 billion) until 2010 to solve many long-overdue infrastructure issues as well as prepare for the upcoming 2014 World Cup and 2016 Olympics events.  The PAC 2, released in March of last year, was a continuation of the project that promised spending of R$959 billion (US$582 billion) from 2011 to 2014 (The Rio Times).

Brazil’s industrial output rose 5.3 percent in November from a year ago, the national statistics agency said today in Rio de Janeiro. Economists had expected an increase of 4.7 percent, according to the median forecast in a Bloomberg survey of 24 analysts (Bloomberg).

There have been big headlines in recent weeks about projections that Brazil will become the world’s fifth-largest economy in five years, and that Latin America in general will become a new global economic star. But there are little-known data that should raise questions about such optimistic forecasts (Miami Herald).

President Dilma Rousseff is preparing a package of tax cuts to help exporters that could be unveiled this month, Trade Minister Fernando Pimentel told reporters in Brasilia (Bloomberg).

Brazil’s trade surplus fell 19.8% in 2010 to 20.28 billion USD, the smallest in eight years. Exports grew 31.4% to 201.9 billion, a new record, but imports surged 41.6% to 181.64 billion, the Ministry of Development, Industry and Commerce said this week (MercoPress).

The BNDES’ disbursements to micro, small and medium-sized companies (MPMEs) reached a record R$$ 41.1 billion over the January-November 2010 period, raising this group’s participation to 27% of the Bank’s total releases in the period (BNDES).

Finance Minister Guido Mantega doesn’t rule out applying a quarantine on capital inflows in a bid to stem a rall in the currency, IG reported  (Bloomberg).

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AGRI-PECU

Soybean growers in Brazil, the world’s largest producer after the U.S., may harvest more of the oilseeds next year than the government estimated earlier this month, Agriculture Minister Wagner Rossi said (MercoPress).

Brazilian dairy producers Bom Gosto and LeitBom agreed to merge their businesses, in a bid to compete in global markets (Reuters).

Sara Lee Corp.’s board plans to make a decision about whether to sell or break up the company by the end of the month and hasn’t received a new takeover offer from Brazil’s JBS SA (Bloomberg).

AVIATION

Gol Linhas Aereas expects 2011 domestic air travel demand to rise 10 percent to 15 percent, because of a buoyant Brazilian middle class and increased tourism in South America and the Caribbean, Brazil’s largest airline said (Reuters).

Chile’s LAN  expects its planned merger with Brazil’s TAM to clear regulatory hurdles and take flight in mid-2011, a top executive of the Chilean airline said (Reuters).

Spanish builder Obrascon Huarte Lain SA’s Brazilian unit is interested in contracts to construct and operate airports as Latin America’s biggest economy improves its infrastructure ahead of the 2014 World Cup and 2016 Olympics (Bloomberg).

AUTOMOTIVE

Brazil has become the world’s fourth largest market for the automobile industry with sales of 3.45 million in 2010, up 9.8% over 2009, and is also attracting massive overseas investments to the industry, reports Anfavea the Brazilian Association of automobile manufacturers. Brazil now stands behind China, United States, Japan and ahead of Germany (MercoPress).

BANKING & FINANCE

Banco BTG Pactual SA jumped to first place as the biggest underwriter of local bonds in Brazil for the first time, taking advantage of a surge in offerings amid the fastest economic growth in two decades (Bloomberg).

Itau Unibanco Holding SA, Latin America’s biggest bank by market value, hired Ricardo Cavanagh from Raymond James Financial Inc. to set up an equity research department in Argentina as it seeks to expand beyond Brazil (Bloomberg).

BIOFUELS

With the stroke of a pen President Obama gave the mature, thriving U.S. corn ethanol industry an early Christmas present they didn’t need: a one-year extension of $6 billion in ethanol subsidies and the 54-cents-per-gallon tariff on imported ethanol. Read Unica’s New Year’s Resolution for 2011: End the U.S. Ethanol Policy Boondoggle.

Royal Dutch Shell Plc and Brazil’s Cosan, the world’s No. 1 sugar and ethanol company, won European Union approval for an ethanol and sugar joint venture (Reuters).

OIL

A.P. Møller-Mærsk, the Danish shipper, said it had agreed to pay $2.4 billion in cash to SK Energy of South Korea to acquire its Brazilian assets, gaining access to the huge pre-salt oil deposits off Brazil (New York Times).

A.P. Moeller-Maersk A/S and OGX Petroleo & Gas Participacoes SA found oil at the Carambola offshore well in Brazil. OGX, controlled by billionaire Eike Batista, rose to a one-month high in Sao Paulo trading (Bloomberg).

Petrobras of Brazil is reportedly in talks with Eni of Italy to buy its one-third stake in the Portuguese oil company Galp for 3.5 billion euros (New York Times).

Brazil’s government will hold its first auction of offshore subsalt oil and gas reserves in the second half of 2011, under a new production-sharing model, Edison Lobao, mines and energy minister, said (Reuters).

PORTS

The Superporto do Açu, a US$1.6 billion project developed by LLX, a logistics company owned by Brazil’s richest man, Eike Batista, is an impressive effort to improve the freight transport infrastructure and support the country’s growing trade links with China, the U.S. and others (The Rio Times).

The small island of Tatuoca, on the coast of Brazil’s Pernambuco state, is not really an island anymore. The mangroves that separated it from the mainland have been built over with the expansion of the port of Suape and its surrounding industrial district (BBC).

Miner Anglo American Plc said it secured a 25-year port tariff agreement for the Minas Rio iron ore project in Brazil and will fund a greater share of the development cost of the first phase of the port (Reuters).

POWER

State Grid Corp. of China completed the purchase of seven electricity distribution businesses in Brazil for 989 million US dollars (MercoPress).

The board of directors of the Brazilian Development Bank (BNDES) approved R$ 6.1 billion in financing for Eletrobrás Termonuclear S/A to build Angra 3. The power plant, which is part of the Growth Acceleration Program (PAC), will have an installed capacity of 1,405 megawatts (MW), equivalent to one third of the consumption in Rio de Janeiro state (BNDES).

REAL ESTATE

Real estate prices in Rio have risen rapidly in the last year, since it was announced in 2009 that the country will host the 2014 FIFA World Cup, and then the 2016 Olympics. Along with the pre-salt oil discoveries and general strength of the Brazilian economy, everything seems to spell big opportunities for real estate investors (The Rio Times).

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