News from Brazil

Brazil Business & Economy News

In Brazil on September 30, 2011 at 9:38 am

ECONOMY

Brazil’s central bank has lowered its forecast for economic growth to less than half of last year’s, partly blaming the slowing global economy. The central bank lowered its prediction for growth in 2011 to 3.5%, from 4% that it expected in June (BBC).

A year ago Brazil’s finance minister, Guido Mantega, declared that the world had entered into a “currency war”. He worried that in a depressed global economy, without enough spending to go around, countries would sally forth and grab a bit of extra demand for themselves by weakening their currencies. But the invasion of foreign capital that so worried Mr Mantega has now turned into a shambolic retreat (The Economist).

The latest rosy report came from J.P. Morgan, which released a survey of 40 institutional investors in North America and Europe. Survey participants named Brazil and Colombia as the most promising countries for investment opportunities over the next three years; Brazil’s rapidly expanding middle class promises to yield tremendous growth (New York Times).

The national minimum wage in Brazil will top R$800 per month by 2015, according to predictions by a federal budget proposal unveiled recently. Presenting the proposal to Congress, the Joint Budget Committee said that the minimum wage in Brazil in 2015 would reach R$817.97, an increase of fifty percent (The Rio Times).

Investment under the Growth Acceleration Plan (PAC) will reach 19.5% of Brazil’s Gross Domestic Product (GDP) this year, up on the 15.3% invested in 2003. The expectation, according to the Ministry of Planning, is that investment will continue to climb, reaching around 25% of GDP in 2014 (Portal Brasil).

The volatility of global markets stands to have ramifications the world over, and despite the recent boom in Brazil, many speculate effects will soon be felt close to home. The dollar has made a steady rise against the real during the month of September, a change that is not entirely unexpected in the current climate. Whilst economic growth is still forecasted for the coming year, inflation is seen as a problem even with major tourist events on the horizon (The Rio Times).

The “most internationalized companies” ranking in Valor Econômico’s Brazilian Multinationals Special Edition appointed Vale’s rise from the 13th. place in 2009 to eighth in 2010. The company’s “internationalization index” rose from 31.5% to 41.2%, the newspaper said. In addition, Vale was ranked fourth among the Brazilian companies with greater revenues overseas, with 56.6% from its total revenue, according to the publication.

The capivari is one of 63 local moneys—including bills named after the sun, cactus and the Brazil nut—now circulating in needy neighborhoods throughout Latin America’s biggest economy. The idea is gaining currency as towns seek a share of current economic growth. This month, a new local currency hit the streets in Cidade de Deus, the Rio slum (Wall Street Journal).

A special edition of the Braudel papers feature on the effects of Brazil’s oil wealth (pdf).

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BUSINESS

A Nissan representative in Brazil confirmed plans for a factory in the country producing around 200,000 vehicles annually, but declined to comment on details. In June, Nissan said a new plant in Brazil would ease reliance on Mexican production for the South American market (MercoPress).

A much-hyped $12 billion plan for Taiwanese manufacturer Foxconn to produce iPads in Brazil is “in doubt” due to stagnant negotiations over tax breaks and Brazil’s own deep structural problems such as a lack of skilled labor, government sources tell Reuters.

Eike Batista, the world’s eighth-richest person, is the controlling shareholder of the EBX group, which is involved in industries including energy, mining, shipbuilding and logistics. Batista, 55, is Brazil’s richest man with a fortune estimated by Forbes at $30 billion. He and the companies he controls plan to invest $15.5 billion in Brazil between 2011 and 2012. The following are the most important companies in the EBX portfolio.

AGRI ETC.

JBS started in 1953 as a butchers founded by José Batista Sobrinho in Anápolis, a city in Brazil’s central state of Goiás. The firm expanded initially thanks to a fast-growing Brazilian economy and more recently by acquiring other companies. It is now the world’s largest meat producer. In 2010 it had revenues of 55 billion reais ($31 billion), only a third of which were from its operation in Brazil (The Economist).

With almost half of its energy supply generated by renewable sources, Brazil increasingly looks like a positive example for the rest of the world (Renewable Energy World).

AVIATION

Embraer and Deutsche Lufthansa AG signed a contract, today, for the purchase of five additional EMBRAER 195 (E195) jets. The aircraft will be operated by Verona-based Air Dolomiti, Lufthansa’s regional partner in Italy. The value of the acquisition, at list price, is USD 226 million. Deliveries are scheduled to begin in the second half of 2012 (Embraer).

Brazilian airline GOL and Aerolineas Argentinas have signed a codesharing agreement for all their flights between the two South American countries (Xinhua).

SPLIT SECOND POLL

BANKING

Possibly no one embodies the financial ascent of Brazil better than Mr. Esteves. At 43, he has built BTG Pactual into Brazil’s largest independent investment bank and has amassed a fortune estimated at $3 billion by Forbes magazine. Still, he has driven the same Mercedes pickup for four years and takes only two weeks of vacation a year (New York Times).

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OIL & GAS

Brazil cut a tax on fuel sold by Petrobras by 16% helping prevent surging import costs from squeezing profit margins at the state-run company and reducing the need for price increases as inflation quickens (MercoPress).

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