News from Brazil

Brazil Business & Economy News

In Brazil on September 2, 2011 at 9:46 am

ECONOMY

Brazil’s monetary-policy committee decided to cut the Central Bank’s benchmark interest rate by half a percentage point, to 12%. It was the committee’s most unpredictable meeting for many months. The timing of Mr Mantega’s announcement—the day before the monetary policy committee started its deliberations—raised some eyebrows (The Economist).

The surprise cut has raised questions about the independence of the central bank, after a number of politicians called for a rate cut in recent days. These included President Dilma Rousseff (BBC).

Brazil’s trade surplus grew more than expected in August as the value of exports climbed to its highest this year, outpacing strong import growth (Mercopress).

The Ministry of Planning sent to the Brazilian National Congress the Draft 2012 Budget Law. The planned investments for next year total 100 billion dollars, of which 35 billion come from the fiscal budget and 65 billion from state companies. The amount is 8.3% higher than in 2011. Much of this investment will be done in the context of the second Growth Acceleration Program (PAC 2) (Portal Brasil).

The budget proposal assumes 5 percent GDP growth next year, far higher than economists’ consensus forecast of 3.9 percent and a contrast with mounting signs of a sharp slowdown this year. An optimistic growth outlook risks overestimating tax revenues, which are expected to rise by 7 percent, and could force a new round of budget cuts next year (Reuters).

Brazil will likely expand by 3.5 percent in 2011, down from a previous view of 4 percent, because of global financial turbulence, the United Nations economic body for Latin America said (Reuters).

Brazil’s economy showed new signs of a slowdown as steelmakers slashed their growth forecasts, the country’s No. 1 airline scaled down its expansion plans and a new poll showed growing pessimism in the manufacturing sector (Mercopress).

Brazil’s strong currency benefits consumers but punishes businesses. Capital inflows that contribute to the appreciation of Brazilian real critics say, undermines the competitiveness of manufacturing (The Guardian).

Brazil’s unemployment rate fell in July to its lowest level this year, 6% from 6.2% in June, reported the National statistics office. Average real wages rose 4% from a year ago to 1.613 Real (999.50 dollars) a month (Mercopress).

Brazil’s economy is slowing, but the government is increasing its primary surplus by cutting spending, which could slow the economy more.  In June, industrial production fell by 1.6 percent, and economic activity fell for the first time since 2008. Although monthly figures are erratic and don’t necessarily indicate any trend, the overall picture raises questions about whether government policy is appropriate in the face of the growing headwinds and risks in the global economy (CEPR).

Recent discoveries of petroleum in the Brazilian shores has changed the country’s economic profile and requires a more qualified workforce. This article in The Brazil Business will map you the careers that are growing in the five regions of the country (The Brazil Business).

BUSINESS

Eletrobras, Centrais Eletricas Brasileiras SA, Latin America’s largest publicly traded utility, is in talks to buy a stake in EDP-Energias de Portugal SA from the Portuguese government (Bloomberg).

Drogarias Pacheco SA agreed to buy Drogaria Sao Paulo SA to create Brazil’s largest drugstore chain with annual revenue of about $2.8 billion (Bloomberg).

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AGRI ETC

The world’s largest beef producer, Brazil’s JBS, will shift its meat packing operations to other locations where it operates in the country, to reap tax savings (Mercopress).

Brazil’s weather-ravaged sugar cane crop could rebound next year, helping the country begin to revive lagging ethanol production, an agriculture official said, but raising output to a comfortable level will take time and effort (Reuters).

AVIATION

Kenya’s Airways (KQ), the east African country national carrier announced it has signed a contract for acquisition of 10 Embraer 190 jets in a deal that includes the purchase rights for 16 jets from the company (Mercopress).

Embraer is seeking to expand its international aviation markets with focus on Africa, where its jets’ fuel efficiency, prices and payments terms are likely to have an edge over competitors (UPI).

A court has ordered Brazil’s second-largest airline to plant trees near Sao Paulo’s international airport to compensate for pollution caused by its passenger jets. The Sao Paulo State Court of Justice says in a statement that Gol Lineas Aereas Intelligentes S.A. must reforest an area whose size has not yet been determined to compensate for pollution generated by departing and landing aircraft at the airport, located next to the city of Guarulhos (Washington Post).

TAM, Brazil’s largest airline, said it was reducing its planned fleet by four planes to control costs as demand grows more slowly than expected in Brazil’s air travel market (Reuters).

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MINING & STEEL

Mining company MMX, controlled by billionaire magnate Eike Batista, said a certification study showed the firm’s iron ore resources stood at 3.1 billion tonnes, more than twice the previous estimate (Reuters).

OIL & GAS

During a joint public hearing of the Committees on Economic Affairs and on Infrastructure, the president of Petrobras, Sérgio Gabrielli, said that the production of Petrobras and its partners should triple during the next decade. The estimate is that the production will rise from two million barrels produced nowadays to more than three million in 2015 and six million in 2020 (Federal Senate).

More than two dozen Greenpeace activists have invaded the Rio de Janeiro office of OGX Brasil. That is an oil-services and shipbuilding company controlled by Brazilian billionaire Eike Batista. The group wants to prevent oil companies such as OGX from exploring for oil near a national park called Abrolhos. The park includes five islands with great diversity of marine life. Humpback whales breed there starting in July (Washington Post).

Brazil’s government will reclaim promising oil exploration blocks won by companies in a bidding round five years ago but never formally leased to the winners, the country’s energy minister said (Reuters).

Petrobras’  fuel distribution division said it will invest 5.2 billion reais ($3.3 billion) between 2011 and 2015 to meet soaring demand for diesel, gasoline and other fuels driven by quick economic growth (Reuters).

TELECOMS

Brazil hopes to attract 70 billion reais ($44 billion) in investment in its telecoms sector in the next four years for the construction of fiber optic cable networks by exempting companies building them from certain taxes, the communications minister said (Reuters).

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