News from Brazil

Brazil Business & Economy News

In Brazil on June 1, 2012 at 9:32 am

ECONOMY

Most economists and analyst expect accelerated economic growth (it shouldn’t be difficult to surpass the modest GDP growth of 3% in 2011) and increased deal flow, however, there are a few small mountains to climb along the way. The 800-pound gorillas in the room are obviously the 2014 World Cup and the 2016 Olympics. The magnitude of such global sporting events has the power to deliver both short and long-term economic stimulus, but there are some serious risks. The amount of resources dedicated to preparing the country’s infrastructure for 2014 and 2016 can place a strain on the country’s economy, with failed projects having a serious ripple effect. The country’s success with these events will either give investors further confidence or cold feet (Forbes).

Brazil’s economy is gaining steam after a disappointing first quarter and will grow this year at a faster pace than in 2011, even if Greece rattles the global economy further by exiting the euro zone, Finance Minister Guido Mantega said (Reuters).

The median estimate for Brazil’s 2012 economic growth however fell for a third week, sliding to 2.99 percent from 3.09 percent the prior week, the poll showed. Analysts kept their estimates for growth in 2013 at 4.50 percent (Reuters).

Brazil’s central bank cut interest rates for the seventh straight time to a record low 8.50 percent, moving into uncharted territory in a bid to shield a fragile recovery from a gloomy global outlook (Reuters).

DIRECT DATA

Check out the latest economic indicators in English directly at Brazil’s BCB or central bank, the Sao Paulo stock Eechange BM&F Bovespa and Brazil’s statistics institute, IBGE.

SPLIT SECOND POLL

BUSINESS

While in the past the dream of every Brazilian was to be a full-time employee in a big company in the private sector or in the public sector, nowadays the scenario seems to have changed. The number of people who want to run their own businesses and say goodbye to regular jobs and everything that comes in the package – especially the bosses – is growing. Between 2002 and 2010, the number of young Brazilians aged between 18 and 24 who took a chance at becoming an entrepreneur rose by 74%, according to Global Entrepreneurship Monitor (BBC).

Dockworkers who began a strike in Santos port said they would continue the stoppage until their demands over working conditions were met, while the government threatened to fine them if operations were halted (Reuters).

Brazil has a plan to bolster subsidized credit aimed at increasing corporate investment with 45 billion Real (approx 22.5 billion dollars) from the country’s development bank, BNDES (MercoPress).

China’s State Grid International Development Ltd. bought seven power transmission lines in Brazil for 751.7 million euros ($936 million) (Bloomberg).

FedEx is buying Rapido Cometa Logstica e Transportes SA, one of the largest logistics companies in Brazil. Rapido has been its authorized representative in Brazil for 11 years (USA Today).

AGRI ETC.

Brazil’s government plans to cut taxes for its ethanol sector to stimulate production of the widely used biofuel, as ethanol output remains anemic after the 2008 financial crisis triggered industry consolidation. According to Brazil’s Valor Economico the government is drafting a package that will include the reduction or zeroing out of the so-called PIS/Cofins taxes, which account for about 12 centavos ($0.06) of the typical 1.87-real-per-liter price for ethanol in Sao Paulo (Reuters).

The amount of sugar awaiting loading at ports in Brazil, the world’s largest producer, rose 26 percent over the past week as Muslim nations stepped up purchases before the fasting month of Ramadan (Bloomberg).

AUTOMOTIVE

The Mercedes-Benz unit of German automotive group Daimler AG will lay off 1,500 workers at a Brazilian truck factory for up to five months because of declining production, according to the union representing workers at the plant (Reuters).

Jaguar Land Rover, the luxury car unit of India’s Tata Motors has followed Germany’s BMW AG in suspending plans to build a new plant in Brazil as tax changes and slowing growth have given premium auto makers cold feet about investing in a potentially lucrative market (MercoPress).

AVIATION

Azul Linhas Aéreas Brasileiras bought control of smaller rival Trip for an undisclosed sum, in a move that reflects growing consolidation efforts among the nation’s carriers (Reuters).

David Neeleman, who founded JetBlue Airways and then left the airline in 2008, will run the holding company that controls his Brazilian venture, Azul Linhas Aéreas Brasileiras, and rival carrier Trip (Reuters).

Brazil is considering measures to shield its air travel industry from global markets turmoil. Demand for domestic flights will likely grow between 8 percent to 10 percent this year, outpacing the local economy, but below the 17 percent expansion seen last year (Reuters).

Bombardier is back on track in Brazil. The Canadian airplane manufacturer not only settled its bitter trade war there, it’s leading a new era of investment too (Macleans).

BANKING

Lazard Ltd said it bought out the remainder of its Brazilian investment banking joint venture and hired a former president of the Central Bank of Brazil, as it looks to bolster its operations in the country (Reuters).

Bradesco is in the final stages of acquiring the Brazilian subsidiary of Spanish bank Santander. Both banks have strongly denied the claim, with Santander saying their Brazilian arm was “not for sale” and Bradesco releasing a statement saying it “emphatically negated” the assertions made by the Rio based newspaper (The Rio Times).

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MINING & STEEL

Vale faces an investigation of two Amazon copper mines after allegations that the projects improperly used Indian lands and failed to replace forest cut to build a power line, a Brazilian prosecutor told Reuters.

Vale also agreed to sell its thermal coal assets in Colombia for $407 million to a unit of Goldman Sachs Group Inc.  as it focuses on metal production (Bloomberg).

Billionaire Eike Batista, Brazil’s richest man, hired Banco Bradesco BBI SA to sell a stake in his AUX gold business after dropping plans for an initial public offering (Bloomberg).

OIL & GAS

Petrobras expects to complete the bulk of a $13.6 billion asset-sale plan by the end of the year, helping finance $225 billion of investments under its five-year corporate spending program, the world’s largest. Assets up for sale include stakes in the company’s exploration blocks in Brazil and in the Gulf of Mexico and refineries in Texas and Japan, Chief Financial Officer Almir Barbassa told Reuters.

Transpetro, the transportation arm of state-run oil giant Petrobras, said it suspended the purchase of 16 out of 22 oil ships ordered from EAS as part of its fleet-renewal program (Reuters).

British natural gas firm BG Group Plc said it had signed a definitive binding agreement to sell its entire 60.1% stake in Comgas to Brazilian energy company Cosan S.A. for 3.4 billion Brazilian Reais, which is about $1.7 billion at current exchange rates (MercoPress).

LLX signed a contract with Subsea 7, a global leader in subsea engineering and construction, for the installation of a plant for the fabrication and coating of long, rigid subsea pipelines at the Açu Superport, the industrial port complex under construction in São João da Barra, in upstate Rio de Janeiro (EBX).

TELECOMS

Telecom group Oi will get “very aggressive” to keep its client base and catch up with competitors in the country’s hotly contested wireless market, Chief Executive Francisco Valim said (Reuters).

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