News from Brazil

Brazil Business & Economy News

In Brazil on August 26, 2011 at 10:36 am

ECONOMY

Growth in Brazil and other emerging nations may slow down because of worsening economic conditions in the United States and Europe, Brazil’s finance minister said. Guido Mantega told a Senate committee that the government is still forecasting growth of 4.5 percent this year. But this figure could drop to 4 percent he added (Washington Post).

But Brazil’s government is internally forecasting that the country’s economy will grow by 3.7 percent this year, below the 4 percent figure provided this week by Finance Minister Guido Mantega (Bloomberg).

Brazil’s unemployment rate fell to its lowest level this year, undercutting bets that policy makers will reduce borrowing costs. Yields on interest rate futures jumped (Bloomberg).

Brazil can’t allow an invasion of “hot money” and must deter speculation in the currency derivatives market, Finance Minister Guido Mantega said (Bloomberg).

Brazil’s soaring real currency is reducing the ability of local manufacturers to compete and causing Latin America’s largest economy to edge closer toward an economic phenomenon known as “Dutch disease,” according to the chief financial officer of state-run energy giant Petrobras (Fox business news).

BUSINESS

The federal government has announced that it will expand its National Program of Oriented Productive Microcredit (PNMPO).  With the expansion, the program will be renamed “Growing – National Microcredit Program,” and will include new conditions for financing, including lower interest rates and lending targets for public banks.  The program will retain its main feature: extending credit opportunities for individual entrepreneurs and micro-enterprises with a turnover of up to R$ 120,000 annually (Portal Brasil).

Recently, president Dilma Roussef announced the plan Brasil Maior, a protectionist program that aims to avoid the deindustrialization of the country. Among other measures, the program aims to decrease the import of foreign workforce (The Brazil Business).

Nissan Motor Co., Japan’s second- largest automaker, is in talks with billionaire Eike Batista for a possible partnership in Brazil as it seeks to quadruple its car output capacity in the Latin American country (Bloomberg).

AGRI ETC

The Brazilian sugar-energy industry needs a new cycle of investments in order to meet growing demand for ethanol, both domestic and global. The conclusion came from the Washington Representative of the Brazilian Sugarcane Industry Association (UNICA), Leticia Phillips, during a presentation at the Southeast Bioenergy Conference (Unica).

Last month the Labor Public Ministry (MPT), released its biannual ‘Lista Suja,’ or ‘Dirty List,’ naming and shaming companies that have been found to be exploiting workers. There were 48 new names added to the list, bringing the total to 251. The majority of the new entrants, sixteen, were based in the Central-West region of Brazil (The Rio Times).

Biofuels are an alternative energy source that can drive local development by generating jobs, know-how and technology. But they can also cause social damage, as locals fear in the case of industrial-scale exploitation of babassu palm trees, which grow abundantly in the wild in central and northern Brazil (IPS News).

AVIATION

Embraer is expanding operations in China, one of the fastest growing aviation markets where the company is already active delivering orders secured earlier (UPI).

Brazil auctioned rights to the first major airport to be operated by a private company as the country moves to pick up the pace of investment in its air travel infrastructure ahead of the 2014 World Soccer Cup. A Brazilian-Argentine consortium called Infra-America competed against three other groups to win the concession to build and operate new airport terminals near the northeastern Brazilian city of Natal. The consortium has three years to build the Sao Goncalo do Amarante airport. It will then hold rights to operate it for 25 years (Nasdaq).

TAM said it would begin offering a daily roundtrip flight between Sao Paulo and Mexico City starting Oct. 30 in an effort to expand its international service (LAHT).

Delta delayed talks with Embraer and rival Bombardier Inc. as it prepares to buy 100 Boeing Co. 737s (Bloomberg).

BANKING & FINANCE

Plural Capital, a Brazilian securities firm formed by former UBS AG and Banco Pactual bankers, agreed to purchase Banco Modal as part of a plan to expand into asset management and other lucrative financial services (Reuters).

Loan defaults in Brazil rose in July to their highest level in 17 months, a new indication that higher borrowing costs and an economic slowdown is hampering the credit-worthiness of consumers and companies (Reuters).

BTG Pactual, Brazil’s largest independent securities firm, and Chilean rival Celfin Capital are in talks to combine their businesses in a deal that could create Latin America’s largest independent investment bank (Reuters).

State-run Banco do Brasil will launch its offer to buy more shares in Argentina’s Banco Patagonia starting on Sept. 1, the Brazilian bank told the Buenos Aires stock exchange (Reuters).

MINING & STEEL

Investment in Brazil’s mining sector is forecast to grow to a record $68.5 billion in the 2011-2015 period, the national mining institute, Ibram, has forecast.  Reuters presents a list of the 10 largest investments planned for the sector, including construction of new mines, expansion of existing projects, and investments in processing and logistics, according to Ibram.

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OIL & GAS

When Brazil discovered huge offshore crude reserves four years ago,  Petrobras sketched out plans to become a regional fuel exporter. That plan has since been turned upside down. Rapid domestic economic growth and rising fossil fuels use has turned it into a recurrent fuels importer, with occasional gasoline purchases in 2010 evolving into regular imports that may not cease until the end of the decade (Reuters).

PORTS & LOGISTICS

Pecém is being developed as an industrial and energy hub on an area of 330 square km adjacent to the port on the Atlantic coast, created in 2002 some 60 km from Fortaleza, the capital of the state of Ceará.  Companies are flocking to set up factories here. A score of service, energy, and cement industries, including manufacturers of wind turbines, have already made their bases at the Industrial and Port Complex of Pecém (CIPP), which is administered by the Ceará state government (IPS News).

Vale said it has created a new logistics company for cargo transport, but it denied media reports it is planning to sell stock in the unit in a spin-off (Reuters).

As many as 64 ships are waiting to load sugar at Brazil’s ports in the Center South, the country’s main producing region, eight more than a week earlier, according to Williams Servicos Maritimos Ltda (Bloomberg).

Usinas Siderurgicas de Minas Gerais SA, the Brazilian steelmaker aiming to quadruple its iron-ore production, stands to gain the most from an auction for a $1 billion port terminal to be built in Rio de Janeiro state. The state government will take bids later this year for a lease on the so-called Area do Meio (Bloomberg).

Rio de Janeiro state denied a request from Petrobras to build a port in Sepetiba bay to support the oil company’s deep-water drilling in the area, O Estado de S.Paulo reported, citing state Energy Secretary Julio Bueno (Bloomberg).

POWER

President and CEO of Brazil’s Energy Research Company (EPE), Mauricio Tolmasquim, announced that for the first time ever in Brazil, wind power prices are less expensive than natural gas prices.  This announcement follows the results of energy auctions held last week by Brazil’s National Electric Power Agency (Aneel) (Portal Brasil).

The Brazilian northeastern state of Ceara created a fund to buy solar power in a bid to lower the cost and attract solar equipment makers to the region (Bloomberg).

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