News from Brazil

Brazil Business & Economic News

In Brazil on December 2, 2011 at 11:48 am

ECONOMY

The government of President Dilma Rousseff is seeking to prevent the global crisis from derailing Brazil’s boom, which has lifted more than 25 million people out of poverty over the last decade and made the country an emerging powerhouse. The measures, which take effect immediately, encompass a broad spectrum of the economy, from stock and bond purchases to tax breaks for domestic manufacturers. They include:  Eliminating the IOF transactions tax on foreign purchases of Brazilian stocks, eliminating the IOF tax on foreign purchases of corporate bonds with maturities of more than four years, a reduction in the IOF tax on personal loans to 2.5 percent from 3 percent per year, a reduction of the IPI industrial tax on home appliances, such as stoves, refrigerators, freezers and washing machine, a 3 percent tax rebate for exporters of industrialized good, eliminating a tax on pastas, flour and bread. Analysts said the measures might not be enough to stave off a deeper slowdown if major economies crumble further (Reuters).

The Brazilian Central bank latest decision to lower the basic interest rate by half a percentage point to 11%, confirms Brazil leadership as the country with the highest real interest rates in the world. An honour it has held interruptedly for the last 23 months (MercoPress).

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BUSINESS

British engineering group Rolls-Royce has been awarded contracts worth up to $650 million by Brazil’s state oil company Petrobras to support its production activities offshore Brazil (Reuters).

Exports of Scotch whiskey to Brazil were up nearly 50%, reaching almost 10 million litres of pure alcohol, according the Scotch Whisky Association (SWA) (BBC).

AGRI ETC

When most people around the world think of Brazil, wine is not something that springs to mind. Even in the country itself, most Brazilians don’t give fermented grape juice much thought. It is very much a beer drinking nation, lager to be specific. And served as cold as possible to refresh in the hot weather. Yet Brazil has had a small wine industry for hundreds of years, started by the first Portuguese settlers, and then continued by Italian immigrants (BBC).

AUTOMOTIVE

Sales of cars and light trucks in Brazil rose 15.7 percent in November from October after two months of declines, signaling recovering consumer appetite after a sharp third-quarter slowdown in Latin America’s largest economy (Reuters).

AVIATION

Brazil saw above-average growth, but much slower than in the year to date. Brazil’s growth has slowed fastest, at 6.4 percent in October compared with an average of 15.1 percent in the year to date (Reuters).

Embraer sees little effect from possible jet returns by AMR Corp., which sought court protection from creditors this week, top executives from the planemakers said. Embraer, based in Sao Jose dos Campos, Brazil, sees AMR returning “a fraction of a fraction” of the 216 planes made by the Brazilian company that it operates, said Chief Financial Officer Paulo Penido (Bloomberg).

President Dilma Rousseff signed a concession plan that would allow private investments for the first time in airport construction and operation as Brazil races to prepare for the 2014 soccer World Cup. Under the plan, the Sao Goncalo do Amarante Airport in the northeastern state of Rio Grande do Norte, would be ran by Inframerica, a consortium formed by Brazil’s Engevix and Argentina’s Corporation America (Xinhua).

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MINING & STEEL

A Brazilian court upheld a ruling requiring mining company Vale to pay 25 billion reais ($14 billion) in back taxes on overseas profits, raising the risk of double taxation on Brazilian companies’ foreign earnings (Reuters).

Vale plans to invest $21.4 billion on mining projects in 2012 after failing to meet spending targets this year. The Rio de Janeiro-based company will invest $12.95 billion on project execution, $2.4 billion on research and development and $6.1 billion on sustaining existing operations, it said in a regulatory filing. Iron-ore output will be 312 million metric tons, little changed from this year’s expected 311 million tons (Bloomberg).

Usiminas agreed to buy a mine adjacent to current holdings for $367 million, boosting its mineral reserves as it aims for iron ore self-sufficiency by 2015 (Reuters).

Ternium, Latin America’s second-largest steelmaker, said it would pay $2.2 billion to buy a stake in Brazilian rival Usiminas from two of its minority shareholders, despite tough conditions for mills in the continent’s largest economy (Reuters).

OIL & GAS

Petrobras has been fined 84.5 million reais ($47 million) for infractions at its production units, the National Petroleum Agency (ANP) said (Reuters).

President Dilma Rousseff inaugurated a domestically produced oil tanker for state-controlled oil and gas giant Petrobras. The 183-meter-long Celso Furtado can carry a payload of 56 million liters of oil. It is Petrobras’ first tanker built in Brazil in 14 years. A total of 74 percent of Celso Furtado’s parts were produced in Brazil (Xinhua).

British North Sea oil and gas firms looking to export to Brazil have been boosted by a $1bn (£636m) credit guarantee. Credit agency UK Export Finance is providing the guarantee for Brazilian oil giant Petrobras to finance UK exports for its investment programme (BBC).

TOURISM

In 2010, the number of overseas visitors to the country totalled 5.2 million, according to the United Nations World Tourism Organisation. This meant that Brazil did not even feature in the global top 10, and it was dwarfed by world number one France, 76.8 million, and number two, the US, 60 million. There are numerous reasons why Brazil remains off the main holiday map, but perhaps the biggest two are the fact it is rather a long way from Europe and the US, and a perception of high crime levels (BBC).

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  1. My wife and I arrived in Rio Dec 2 on Continental, along with 3 other planes from the US. There were a lot of foreigners to have their passports processed by immigration – obviously. The line for Brazilian citizens moved quickly and soon only a few remained to be admitted while there were still lots of foreigners waiting. A man asked an official why the line for foreigners had so few funcionaries processing them. The official clearly and loudly replied that Brazilians have preference. That’s one very good reason why so few foreign tourists visit Brazil. If you are treated like a second-class person at the moment you arrive, it’s quite possible you will feel less than welcome. I know Brazil and I know many Brazilians – they are a welcoming and friendly people. Why do government officials feel the need to denigrate and demean foreign visitors?

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