News from Brazil

Brazil Business & Economy News

In Brazil on June 24, 2011 at 9:43 am

ECONOMY

Guess who is creating more jobs this year? The US economy or Brazil’s? It’s probably a no brainer. Despite the fact that Brazil’s economy slowed from 7.5% growth last year to 5.5% in the 12 months ending March 31, the country created 1.17 million new jobs so far this year, the Labor Ministry said. By comparison, the US created 783,000 jobs, according to the Bureau of Labor Statistics (Forbes).

Moody’s Investors Service upgraded Brazil’s sovereign credit rating, giving a vote of confidence to the government’s efforts to prevent Latin America’s largest economy from overheating (Reuters).

Brazilian industry is losing competitiveness in the international market. There is a growing influx of foreign manufactured goods and the country is at risk of strong deindustrialization. Those warnings were made by specialists who took part in a hearing at the Permanent Subcommittee on Evaluation of National Tax System, bound to the Committee on Economic Affairs (Federal Senate).

Any investor thinking in doing business in Brazil needs to have key information regarding: (a) how to enter the market, (b) sources of funding, (c) investment incentives, (d) taxes, (e) labor, and (f) international trade. Lear the tricks from an insider at The Miami Herald.

AGRI ETC

After transforming global agriculture by quintupling their soybean production since 1980, Brazilian farmers are now on the brink of crop breakthroughs in cotton and corn, long dominated by growers in America (Reuters).

The merger that created Brasil Foods could harm competition, a member of Brazil’s antitrust regulator said, adding to worries that the world’s biggest poultry exporter could be broken up (Reuters).

Brazil’s government will require foreign investors to seek approval if they want to buy more than 5 hectares of land, O Estado de S. Paulo reported (Bloomberg).

Brazil’s sugar and ethanol industry needs $80 billion of new investment in the next 10 years to meet global demand, according to industry association Unica (Bloomberg).

SPLIT SECOND POLL

AVIATION

Rolls-Royce has won a £1.3bn deal to supply engines for 27 Airbus 350 long-haul planes bought by Brazil’s TAM Airlines (BBC).

Strong oil prices and the euro zone crisis threaten to cut short the recovery of an increasingly competitive aircraft manufacturing industry, the head of Brazil’s jet builder Embraer told Reuters on the eve of the Paris Air Show.

Embraer and Air Astana, the national flag carrier of Kazakhstan, signed a contract for the sale of two EMBRAER 190 jets at the 49th Paris Air Show, in France. The deal also includes options for another two aircraft. The total value of the contract, at list price, is USD 85.6 million, based on January 2011 economic conditions, and could reach USD 171.2 million, if all options are exercised. Deliveries are scheduled to begin in the first half of 2012 (Embraer).

Embraer and Kenya’s national flag carrier Kenya Airways signed a Letter of Intent, subject to final agreement, for the acquisition of ten EMBRAER 190 jets,  at the 49th Paris Air Show. The deal also includes options for another ten aircraft, which could be either the EMBRAER 190 (E190) or the EMBRAER 170 (E170) (Embraer).

Sriwijaya Air, of Jakarta, Indonesia, has signed an agreement subject to final documentation for the acquisition of 20 EMBRAER 190 jets, with purchase rights for ten more aircraft. The order was also announced at the 49th Paris Air Show. The total value of the deal, at list price, is USD 856 million, based on January 2011 economic conditions, and could reach USD 1.28 billion, if all purchase rights are exercised (Embraer).

US carrier JetBlue will use fewer of its 100-seat Embraer E190s than planned. As of the end of March it was flying 46 of them, with orders for 51 more. That would have totaled 97 planes. Now it said it will need no more than 75.  Options include selling older ones, selling its spots in line with Embraer, or negotiating with the Brazil-based plane maker to get out of the firm order (Washington Post).

Embraer published its 2011-2030 market outlook for commercial aircraft in the 30- to 120-seat segment (Embraer).

TAP Manutenção e Engenharia Brazil (TAP M&E Brazil) has been voted for the second consecutive year “as the best in Aviation Maintenance in Brazil” in the ‘Maintenance, Repair and Overhaul (MRO)’ category, by the Avião Revue Award 2011 (TAP).

BANKING & FINANCE

Brazil’s biggest housing lender, Caixa Economica Federal, plans to sell up to $2 billion in mortgage-backed securities this year to institutional investors as part of a plan to modernize the sector and ensure continued growth, the bank’s president said (Reuters).

HOTELS

Hotel operator Brazilian Hospitality Group may expand operations in some Latin American countries to gain scale and tap rapid income growth in the region, Chief Executive Peter van Voorst Vader said (Reuters).

MINING & STEEL

Less than two weeks after the Australian government released details of its revised mining tax, a report from Brazil suggests a tax of up to 25 per cent is being considered for that nation’s mining industry. Projects owned by Brazilian iron ore giant Vale are among those that would be affected by a ”special participation tax”, according to the Folha de Sao Paulo newspaper (Sydney Morning Herald).

TWITTER & LINKEDIN

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OIL & GAS

Moody’s Investor Services (Moody’s), the risk rating agency, upgraded Petrobras’ foreign currency debt, and that of subsidiaries backed by Petrobras, from Baa1 to A3 (BW).

Petrobras oil and gas corporation needs to control costs in its investment program, Brazil’s Finance minister said, days after he and other board members told the company to revise an update of its 224 billion US dollars spending plan (MercoPress).

The showdown between the management of Brazil’s state-controlled oil giant Petrobras and the government should not be ignored as it has huge ramifications for the oil market (Reuters).

The Brasil Offshore event saw over 600 companies from around the world set up in Macaé’s Convention Centre from the 14th until the 17th of June. The show consisted of the massive exhibition area where companies from all over the world were positioned, trying to attract interest in their products and services. Along with the Brasil Offshore exhibitors were a number of presentations where industry executives outlined Brazil’s long term plans for developing the exploration and production of the country’s massive Pre-Salt oil reserves (The Rio Times).

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