News from Brazil

Brazil Business & Economy News

In Brazil on January 13, 2012 at 10:58 am

ECONOMY

With extraordinary speed, China has become Brazil’s most important economic partner: total trade between the two countries has risen 17-fold since 2002. But frictions are increasing almost as fast. Although Brazil enjoys a big overall trade surplus with China, most of its exports are of commodities (mainly iron ore, soya beans and crude oil). It has a big deficit in manufactures. China has become Brazil’s biggest economic partner—and its most difficult one and now Brazil is seeking protection (The Economist).

Economists cut forecasts for Brazil’s year-end inflation for a sixth consecutive week but held growth predictions, a central bank survey showed, suggesting concerns about a slowdown are easing (Reuters).

Brazil’s economy may enjoy faster growth and lower inflation this year as stimulating policies such as tax and interest rate cuts are taking effect, Finance Ministry said. GDP growth is expected to reach 4 percent to 5 percent in 2012 and inflation would be kept below 5 percent, predicted Finance Ministry Executive Secretary Nelson Barbosa (Xinhua).

A leading Brazilian economist Edmar Bacha, one of the architects behind the 1994 Plan Real to stabilize Latin America’s largest economy said the country was at risk of becoming entirely dependent on natural resources exports and urged greater savings to invest in diversification (Mercopress).

How does the Brazilian economy continue to expand while many of its neighbors wallow in volatility and stagnation? The answer is sound macroeconomic policy. While Brazil’s economy hurtles toward economic convergence with the Western world, other underdeveloped countries would do well to examine the economic strategy that fostered its ascent. Brazil’s current status is the culmination of several stages in its economic succession (Huffington Post).

President Dilma Rousseff’s administration estimates the real will strengthen beyond 1.80 per U.S. dollar this year, a government official with knowledge of internal discussions on the issue said. The government expects the euro region to start recovering from its current crisis in the second half of 2012, which will help weaken the dollar against other currencies, said the official, who asked not to be identified because the government doesn’t officially forecast currency moves (Businessweek).

BUSINESS

E.ON said it will buy a 10 percent stake in Eike Batista’s MPX Energia, only weeks after losing a bid for a stake in Portugal’s EDP , as the group struggles to tap new markets following Germany’s move to exit nuclear power (Reuters).

AGRI ETC

The price of frozen-concentrated-orange-juice futures has leapt by around 25% since the start of the year to a 34-year high, mainly on concerns that Brazil, an important source of American imports, may have used banned fungicides which could result in an import ban (The Economist).

EU governments will meet next week to discuss the results of U.S. tests for the fungicide carbendazim in orange juice from Brazil, and have the option to begin targeted testing of imports to Europe if needed (Reuters).

Banco Nacional de Desenvolvimento Economico e Social, Brazil’s national development bank, will lend sugar-cane mills as much as 4 billion reais ($2.2 billion) to plant more crops as ethanol supplies dwindle (Bloomberg).

The Brazilian government lowered 0.1% its estimate for the 2012 harvest that should reach 160.3 million tons, considered a record volume. Overall this year’s harvest should be 0.3% above the 159.9 million tons of 2011, according to data from the Brazilian Geography and Statistics Office, IBGE (Mercopress).

AUTOMOTIVE

Brazil’s automobile industry has beaten its own sales record for the fifth year running, bettering sales figures for the previous year, and making it the fifth biggest car seller in the world, market sources have revealed. Although lower than expected, the figures are particularly good in light of the implications of ongoing financial troubles in Europe and the U.S., and a painful tax hike on imported vehicles (The Rio Times).

AVIATION

Embraer, the world’s third-largest commercial planemaker, said 2011 deliveries fell to a three-year low, missing initial estimates after the global downturn had led to a string of canceled executive jet orders. Still, the company replaced deliveries of regional E-Jets last year with new firm orders, keeping its commercial aviation backlog steady for the first time since 2008 in a sign of resilience despite a global slowdown in civil aviation (Reuters).

INFRA

Major infrastructure works are sprouting like mushrooms in Brazil, generating millions of jobs and drawing more than 60 billion dollars in foreign investment in 2011. But this thrust has failed to sustain economic growth, which according to the latest projections is below three percent (IPS).

Brazil plans to lower rail freight rates by as much as 40 percent, O Globo reported, citing unidentified people with knowledge of the plan. The country’s land transportation agency, known as ANTT, will publish the proposal on Jan. 9 to solicit comment on it, O Globo said. ANTT sets the maximum rate railroad operators can charge in Brazil. Vale SA and ALL America Latina Logistica SA are among the main railroad operators in Brazil (Bloomberg).

MINING & STEEL

ARCADIS, the international consultancy, design, engineering and management services company, announced that its Brazilian subsidiary ARCADIS Logos has signed a large contract to provide construction management services for a major mining project in the Brazilian state of Minas Gerais. The client is Mineração Usiminas S.A., a company set up in 2010 as part of Usiminas S.A. group, Latin America’s biggest flat steel conglomerate. The contract value amounts to US$17 million for 14 months of services (Reuters).

Malawi said it has signed a $1 billion deal with Brazil’s Vale for the construction and rehabilitation of a rail line that will transport 18 million tonnes of coal from Mozambique (Reuters).

But families resettled by Brazilian mining giant Vale in the Tete region of Mozambique protested that the company had failed to keep promises it made to them in 2009 (Reuters).

Gold producer Jaguar Mining Inc said it has identified and executed confidentiality agreements with interested parties for a potential merger (Reuters).

OIL & GAS

Petrobras will accelerate reserve growth over the next four years as it deploys more production equipment in deep waters of the Atlantic Ocean, the chief financial officer said. Petrobras, as the Rio de Janeiro-based company is known, needs equipment at discovery sites to meet requirements to classify the oil as proven reserves, CFO Almir Barbassa said in an interview. The company expects to receive 19 production platforms by the end of 2015, he said (Bloomberg).

After reports that federal prosecutors in Campos, of northern Rio de Janeiro state, are seeking US$10.8 billion from Transocean following the oil leak in Chevron’s Frade Field well, many eyes outside the oil industry have taken notice of this multinational firm in Brazil.  The company, with 18,000 employees worldwide reported US$9.576 billion in revenue in 2010, and may be the world’s largest offshore drilling contractor (The Rio Times).

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