News from Brazil

Brazil Business & Economy News

In Brazil on February 24, 2012 at 10:47 am

ECONOMY

Slow profit growth is prompting Brazilian commodities companies to slash capital spending plans, making growth in Latin America’s largest economy even more dependent on consumer spending (Reuters).

Brazil’s currency fell for the first day in three after the central bank offered to sell reverse currency swaps to stem its rally (Reuters).

But later the real headed for a four- month high after a report that showed German business confidence climbed more than forecast spurred optimism about global growth and bolstered demand for higher-yielding assets (Bloomberg).

Brazil in January posted its biggest-ever monthly current account deficit as the country’s recovering economy stoked imports, while the more uncertain outlook abroad dented demand for its exports. The current account deficit widened to $7.086 billion last month, the central bank said. Analysts had expected a deficit of $6.95 billion, from $6.04 billion in December, according to the median forecast of 10 analysts in a Reuters survey.

Commerce businesses trimmed a net 36,345 positions in January, while the government services sector cut its payrolls by 370 jobs. In contrast, a net 37,462 manufacturing workers were hired, and mining companies added 82,506 positions in the month (Reuters).

Brazil’s Finance Ministry denied a report that the government is considering a tax on foreign direct investment to stem the appreciation of the real. Veja magazine reported in this week’s edition that the government is studying the implementation of a tax on all capital inflows as a means of curbing currency gains (Bloomberg).

It’s probably not the biggest risk Brazil faces, but it is worth noting that the one true magnet that’s attracting all of that foreign capital flowing into Brazil is due to just one company: oil and gas rich Petrobras. Brazil’s foreign investments, in fact, are rather dependent on it. Without Petrobras and its massive deep ocean oil discoveries off the coast of São Paulo and Rio de Janeiro states, international inflows into Brazil would look tame. Very tame, in fact (Forbes).

Brazil’s Economic Indicators dating February 23, 2012, can be found here.

BUSINESS

Believe or not in the new corporate mantra: Innovate or Die, here is a list of companies you must have on your radar. The top 10 most Innovative Companies in Brazil (Forbes).

Entrepreneurial activity is on the rise in Brazil and spreading into new industries. Just a few years ago entrepreneurial activity was largely focused on software. Now companies are popping up in health care, manufacturing and digital signage. Innovation in several investment sectors, such as financial services, holds the promise of becoming world class (PEHUB).

The Business Software Alliance, which represents U.S. industry heavyweights such as Microsoft Corp, said Brazil finished last in its survey of 24 countries, earning only 35.1 points out a possible 100 because of its policies in areas such free trade, security, data privacy and cybercrime (Reuters).

Japanese trading company Mitsui & Co bought Brazil’s Veloce Logistica SA for 4.7 billion yen ($58.5 million) to expand into the South American country’s auto parts distribution business (Reuters).

A study commissioned by Japan’s Kirin, before its acquisition of Schincariol, shows an expected growth of nearly 50% in the premium beer market over the next four years (Folha).

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AGRI ETC

International foods processor Bunge Ltd plans to invest an additional 1 billion reais ($584 million) in Brazil with a possible focus on palm oil production, the company’s chief executive of agribusiness in Brazil, Pedro Parente, said (Reuters).

AVIATION

Gol Linhas Aéreas , Brazil’s second-largest airline, expects a higher profit margin this year as stronger ticket pricing overshadows the impact of lower travel demand and high fuel costs (Reuters).

The first 76-seat Embraer 170 passenger plane that Estonian Air leased from Finnair landed in Tallinn Airport (Baltic Course).

BANKING & FINANCE

Brazil’s central bank said it is opening public hearings on its plan to raise capital requirements for banks by 2017 to strengthen the financial system during periods of tight credit. In its implementation of the so-called Basel III rules intended to make financial systems more robust in the face of liquidity shocks, the Brazilian central bank plans to raise banks’ capital requirements from the present 11 percent to 13 percent in 2017 (Reuters).

US based Venture capital firm Atomico went off the beaten path for its first investment in Brazil, and not just in terms of geography (The New York Times).

In recent years, the Brazilian government has used a bitter antidote to ease an inflation rate that has been for many years a burden to the country: high interest rates. With nominal interest rates estimated at 10.5 percent for 2012, Brazil is now the world champion in real interest rates. Such high interest rates in Brazil can be a trap for the assets of borrowers who fail to organize their finances (The Rio Times).

Brazilian banks have increased their reserves by 21% to the equivalent of 67.3 billion dollars fearing a possible moratorium while consumers are facing growing problems to address payments, according to the Sunday edition of Correio Braziliense (MercoPress).

BIOFUELS

It’s a bittersweet moment for Brazil’s energy industry. With a steady stream of petroleum discoveries promising to make Brazil one of the world’s largest oil producers, the country is turning more to oil and gas as biofuels begin to languish. Brazil, one of the world’s ethanol-producing pioneers, began making the sugar-based fuel during the energy crisis of the 1970s as a cheaper alternative to gas. The country continued investing in the sector over the next three decades, making Brazil the number two ethanol producer in the world. Moreover, in 2003 Brazil introduced flex-fuel vehicles, which run on a blend of gasoline and ethanol, giving ethanol producers even more opportunities at the pump. But the tides have changed (As-coa).

Five Brazilians are on the list of the world’s 100 most influential people in bioenergy for 2011 – 2012, prepared by Biofuels Digest, one of the most prominent international newsletters covering renewable energy. Three of the five Brazilians ranked are in the top 25, including the President of the Brazilian Sugarcane Industry Association (UNICA), Marcos Jank, who ranked 24th (UNICA).

INFRA

After selling concessions for the expansion and operation of three major airports and a highway earlier in 2012, Brazil is preparing a plan to sell 10-year highway maintenance contracts without tolls, so-called shadow-toll concessions (Reuters).

Brazil’s government, struggling to move ahead with a new bullet train linking its two biggest cities, will now shoulder most of the risk in the project it hopes will draw Canada’s Bombardier into the bidding. A new auction may take place in November, after two delays and one failed attempt last July in which no bidders showed up (Reuters).

Cosan, Brazil’s biggest sugar and ethanol group, agreed to pay more than double the market price for 5.7 percent of America Latina Logistica (ALL), a railway serving agricultural areas of Brazil and Argentina (Reuters).

Voestalpine AG (VOE), Austria’s biggest steelmaker, plans to build two plants for rail-track switches in Brazil this year to gain as the country prepares to host the soccer World Cup and the Olympic Games. The plants will be located in Sao Paulo and in Sao Luis and are being built together with local partners (Bloomberg).

Senator Jorge Viana (PT-AC) asked the government for more investments in railway transport. According to the senator, Brazil needs to consolidate as a priority the construction of the Intercontinental Railway. Known as EF 354, the railway will start in the northern coast of Rio de Janeiro state and will be outstretched for 4.4 thousand kilometers, up to Acre, in the Brazil-Peru borderline (Federal Senate).

OIL & GAS

Petrobras said it declared the Bauna and Piracaba offshore oil fields in the Santos basin commercially viable, the final step before including them in reserves and initiating full output (Reuters).

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  1. Reblogged this on born again brazilian and commented:
    Some interesting info about the current state of Brazil’s economy and industry for those of us sitting here waiting to see why might happen…

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