News from Brazil

Brazil Business & Economy News

In Brazil on December 9, 2011 at 10:41 am


Brazil Weekly is away on holidays. We wish you the best Season´s Greetings!


Brazil’s economy stalled in the third quarter as the euro zone debt crisis dragged on global demand and the country’s increasingly indebted consumers retreated after nearly three years of buoyant spending. Latin America’s biggest economy posted zero growth from the previous quarter (Reuters).

Brazilian government-controlled companies invested through October 58 percent of the total planned for 2011, signaling the 73 companies will not meet their investment target, Valor Economico reported, citing data from Planning Ministry (Bloomberg).

During her first official visit to Brazil last week, Christine Lagarde, Managing Director of the International Monetary Fund (IMF), praised Brazil’s economic policies, saying that the country was in a strong position to ride out the current global economic instability (The Rio Times).


As long as China keeps growing, Brazil will benefit, mainly by exporting commodities. Brazil’s discovery of very large offshore oil reserves will help further – presenting great technological challenges which, when conquered, will usher Brazil into OPEC. But under this optimistic scenario the currency will remain overvalued and Brazilian manufacturing will keep suffering. To boost productivity, many reforms must be undertaken. Taxation is very heavy and distortionary, promoting informality. Labour laws are outdated and harm job creation. Justice is extremely slow and property laws are poorly enforced. Competition is weak in many areas and protectionism is always a threat. Above all, education is still found wanting. Although universal coverage has been achieved at the fundamental level, Brazilian children learn very little, as evidenced by the standardized international tests results. Its poorly educated labour force is Brazil’s Achiles heel. This is changing all too slowly, despite social policies that have reduced income inequality. Brazil has great potential – not to grow at Chinese or even Indian rates, but to grow at a robust 5 per cent a year over the next decade. To achieve this goal, governments must act now for the future, not commemorate past success (Beyond Brics – FT).

It is 10 years since the Goldman Sachs economist Jim O’Neill first coined the term Bric – Brazil, Russia, India, China – when describing a group of emerging market economies that seemed set on a path of high growth. To mark this anniversary, Justin Rowland reports from the edge of the Amazon in Brazil for Business Daily, from one of the most efficient farms on the planet, owned by Blairo Maggi, the man they call “The King of Soya” (BBC).


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Ford Motor Company announced that it will invest 800 million Reais (446 million dollars) to build a new global model in its Sao Bernardo do Campo plant, the heart of Brazil’s auto industry (MercoPress).


Two years after the Airbus 330 plunged into the Atlantic Ocean, Air France 447’s flight-data recorders finally turned up. The revelations from the pilot transcript paint a surprising picture of chaos in the cockpit, and confusion between the pilots that led to the crash. Read the chilling account of the vioce recorder data (Popular Mechanics).

Delta Air Lines will invest $100 million in Brazil’s Gol Linhas Aereas to increase access to Latin America’s largest air travel market and give the Brazilian carrier much-needed capital to fight rivals. The airlines signed a binding agreement for Delta to acquire preferred shares for 22 reais each through the purchase of American depositary shares (Reuters).

Lan Airline’s $3.3 billion acquisition of Tam, Brazil’s largest airline by market value, received a second recommendation of approval by Brazilian authorities (Bloomberg).

Strong growth in Brazil’s airline industry is luring global players to invest in Latin America’s largest nation, but they have to take a circuitous route due to government restrictions on foreign ownership. “The expansion of the domestic economy will continue to drive the airline industry for the next year,” said Rosangela Riberio, an airline industry analyst (Market Watch).

President Hugo Chavez confirmed a deal with Brazilian aircraft maker Embraer to supply 20 commercial planes for Venezuela’s state carrier to increase Caribbean routes (Reuters).

The U.S. Securities and Exchange Commission is investigating Embraer for possible violation of Foreign Corrupt Practices Act, the Sao Jose dos Campos, Brazil-based company said Nov. 2. The probe started more than a year ago in Argentina with government-controlled Aerolineas Argentinas SA’s $700 million purchase of 20 E-190 jets in 2009, it was now revealed (Bloomberg).


A ruptured hull in the world’s largest dry bulk ship could sink Vale’s multi-billion dollar plan for a flotilla of giant vessels to link its iron ore mines to the mills of top steelmaker China. The two-month-old Vale Beijing was severely damaged this week while preparing to set sail on its maiden voyage, sparking concerns over the safety of the Valemax vessels (Reuters).

ThyssenKrupp AG , Germany’s biggest steelmaker, swung to a 1.8 billion euro ($2.4 billion) net loss this year due to cost overruns at its Brazil plant and parted company with the head of its Americas unit (Reuters).

Anglo American, the mining company investing $14 billion in projects in Brazil, named Paulo Castellari as chief executive officer of its iron-ore unit in the country to replace Stephan Weber. Castellari will oversee construction of Anglo’s largest project, the Minas Rio iron-ore site, which has suffered delays and cost overruns since it was bought in 2008 (Bloomberg).


China’s Sinopec is the favorite to buy part of BG Group’s stake in some of Brazil’s most promising offshore oil areas, a source said, increasing its holdings in a fast-growing frontier believed to hold enough oil to supply China for 15 years (Reuters).

Brazilian prosecutors are probing the possible involvement of state-led oil company Petrobras in a November offshore oil spill in a field operated by Chevron (Reuters).


Brazil is preparing three auctions of wireless airwaves for mobile-phone service in 2012 and is beginning work on a fourth sale to meet the growing demand for data downloads, the nation’s top phone regulator said (Bloomberg).


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