News from Brazil

Brazil Business & Economy News

In Brazil on September 9, 2011 at 10:35 am

ECONOMY

In the last four quarters, the accumulated growth of the Brazilian economy reached 4.7%. The GDP (gross domestic product) in the second quarter of 2011 grew 0.8%. In comparison with the second quarter of 2010, Brazilian GDP grew 3.1%. The highlights were the increase in services (3.4%), followed by industry (1.7%). Agriculture recorded zero growth. The Brazilian GDP in current values ​​reached R$ 1.02 trillion (640 billion dollars) in the second quarter of 2011 (Brasil Portal).

Brazil has been outperformed by the other three BRIC countries, figures for the second quarter of 2011 have revealed. From the traditional BRIC (Brazil, Russia, India, China) group of emerging global economies, Brazil grew the least, following poor results from the country’s industrial and agricultural sectors (The Rio Times).

While Brazil’s central bank seems to have surprised virtually everyone by slashing its benchmark Selic rate to 12 percent last week, officials with knowledge of the decision said that the move was justified by “ugly” data indicating that the economy will slow more sharply than expected, and could possibly contract, in coming months (Reuters).

Brazil’s economy slowed in the second quarter on weakening in the agricultural and industrial sectors, possibly signaling a sharper slowdown in coming months as its boom fades. But Latin America’s largest economy kept growing strongly in some sectors, raising doubts among economists that the central bank’s surprise move to slash interest rates this week may have been premature as inflation hovers above 7 percent (Reuters).

The U.S. has tumbled further down a global ranking of the world’s most competitive economies, landing at fifth place because of its huge deficits and declining public faith in government. Emerging markets gained traction. China took 26th place, highest among major emerging economies; Brazil was 53rd; India was 56th; and Russia was 66th (Washington Post).

When people say Brazil won’t be the next Saudi Arabia, they mean it in a good way. Brazil has discovered enormous oil reserves far off its coast, but the country’s robust and varied economy means it shouldn’t become dependent on oil (NPR).

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BUSINESS

Last month AmBev, the Brazilian subsidiary of the InBev conglomerate, announced that Budweiser would be widely introduced in Brazilian supermarkets by the end of August. The Belgian brewer giant InBev acquired the ‘King of Beers,’ Anheuser-Busch’s Budweiser, in an unprecedented $52 billion takeover in 2008 with plans to take the famous brand global (The Rio Times).

Metalworkers at a General Motors factory in Brazil decided to go on strike to demand a 17.45% wage increase just as the industry is scaling back production amid rising inventories (MercoPress).

French catering group Sodexo said it bought Puras do Brasil for an enterprise value of about 525 million euros ($738.5 million) to take advantage of booming demand in the fast-growing Brazilian market (Reuters).

Braskem, the largest petrochemical company in the Americas, will focus international expansion on the United States even as it considers building “green” plastics factories in Mexico and Asia, Chief Executive Carlos Fadigas told Reuters.

Eletrobras, Latin America’s largest publicly traded utility, said it expects to invest 9 billion reais ($5.4 billion) outside of Brazil through 2020 (Bloomberg).

AVIATION

An Air France flight in July suffered similar technical problems to a jet that crashed into the Atlantic two years ago, French media reported, reigniting a debate over the disaster’s causes (Reuters).

To expand business in Latin America without making acquisitions, Lufthansa is boosting its capacity on routes to Brazil by 60 percent this year, regional manager Antonio Cuoco told Reuters.

Trip Linhas Aereas SA, Brazil’s largest regional carrier, said it agreed to buy as many as 40 ATR-72-600 airplanes from ATR Aircraft for $703 million (Bloomberg).

SPLIT SECOND POLL

BANKING & FINANCE

The BNDES’ disbursements reached R$ 69.4 billion between January and July this year, a reduction of 5% compared to the same period in 2010. Of this amount, R$ 13.6 billion was released last July, with a slight growth of 1.6% against the same month in the previous year (BNDES).

Plural Capital Ltda, a Brazilian asset management company founded by two former Banco BTG Pactual SA executives, hired former BTG partners Evandro Pereira and Pedro Guimaraes as part of a plan to become a full-service investment bank (Bloomberg).

BIOFUELS

Guarani Indians in southern Brazil have called on Shell to withdraw from their ancestral land, where the oil giant produces ethanol from sugar cane, according to a native rights group. “Shell must leave our land… The companies must stop using indigenous land,” said Ambrosio Vilhalva, a Guarani from the Caarapo municipality in the southern state of Mato Grosso do Sul (France24).

Shareholders of Brasil Ecodiesel Industria & Comercio de Biocombustiveis & Oleos Vegetais SA, a biodiesel maker without an adequate supply of feedstock, approved the acquisition of closely held agriculture company Vanguarda do Brasil SA to create a 1.79 billion-real ($1.08 billion) biofuels producer (Bloomberg).

Some of the biggest oil finds on record in recent years have happened off the coast of Brazil, deep below the Atlantic in the so-called pre-salt layer. But even with the prospect of becoming a major oil producer in a few years, “the Brazilian government agenda in favor of promoting clean energies will not change,” according to Allan Kardec, Director of the country’s National Petroleum, Natural Gas and Biofuels Agency (ANP) (UNICA).

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MINING & STEEL

A consortium of five Chinese companies has acquired a 15% stake in Brazil’s Companhia Brasileira de Metalurgia e Mineracao (CBMM), the world’s biggest niobium producer, for 1.95 billion dollars in cash (MercoPress).

Vale is in talks with Chinese and other ship owners to sell or lease its planned fleet of giant bulk carriers, a Vale official told Reuters.

Hire costs of capesize ships that haul ore will rise 25 percent more as exports from Brazil to China drive a rebound that’s doubled rents since Aug. 17, according to Dahlman Rose & Co., a U.S. investment bank (Bloomberg).

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