News from Brazil

Brazil Business & Economy News

In Brazil on August 3, 2012 at 10:27 am

ECONOMY

According to economists, political experts and business figures, the current blip in the Brazil’s financial progress will be short-lived, and booming growth will be back in the next few years. New predictions show the country overtaking European powerhouse Germany to be the world’s fifth largest economy by 2022 (The Rio Times).

Brazil’s industrial output edged up less than expected in June after three straight months of decline, suggesting the central bank may need to take more action to boost the country’s lagging manufacturing sector. Industrial production expanded 0.2 percent in June from May , government statistics agency IBGE said (Reuters).

Brazil’s trade surplus widened in July to $2.879 billion as imports fell sharply  from the previous month due to the global economic slowdown and a weaker local currency, the Trade Ministry said (Reuters).

Brazil’s primary budget surplus is expected to grow in coming months as an increase in economic activity helps contribute to higher government revenues, the central bank said (Reuters).

Thanks to sound policies and built-in cushions, Brazil’s financial system weathered the global crisis that began in 2008 remarkably well, but now policymakers need to monitor for signs of home-grown financial trouble, the IMF said in its later report (MercoPress).

Economists raised their forecasts for inflation this year to 4.98 percent from 4.92 percent in the prior week as recent price indexes showed a spike in food costs. The outlook for Brazil’s economic growth in 2012 remained at 1.9 percent, according to the survey (Reuters).

Brazil’s booming job market is still creating jobs, but not at the the pace it once was.  Data released by the Labor Ministry showed that the once hot job market is now actually cooling off (Forbes).

Brazil’s franchise industry is booming. The Brazilian Association of Franchising states that the sector has been growing 10% to 13% annually for the past decade. This year, Brazil’s franchising industry is expected to grow profits 15%, while the total number of franchise should rise by a further 10% to 2,031 brands (Forbes).

The lack of internal savings, which restricts the country’s capacity to invest in crucial pillars for long-term growth — such as education an infrastructure –, is the biggest obstacle to economic development. This is the opinion of Eduardo Giannetti, 55, an economist, philosopher and professor at Insper. This historic problem is camouflaged by a layer of expansion of consumption, and it is far from being solved (Folha).

The Olympus Corporation, a maker of scientific imaging equipment and cameras, uncovered “irregularities” at a doctor-training program in Brazil, the chairman said (New York Times).

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BUSINESS

Dutch shareholders will seek compensation from the owner of coffee brand Douwe Egberts after it issued a profit warning citing fraud, tax and inventory problems in Brazil, just three weeks after listing on the Amsterdam stock market. The Dutch Association of Shareholders (VEB), which mainly represents individual investors, said it will demand redress from coffee company D.E Master Blenders 1753, its former parent Hillshire Brands, and two advisors (Reuters).

Eike Batista, facing tumbling confidence among investors in his energy and mining conglomerate, said he will delist logistics company LLX Logistica SA (Reuters).

Forbes comes up with four reasons why investors and entrepreneurs alike should be keeping an eye on Brazil – the sixth-largest economy in the world – and its hot mobile scene.

AGRI ETC.

Despite a drop in soybean output, the country is harvesting a record corn crop, which is expected to boost this year’s exports to unprecedented levels. Prices are meanwhile rocketing into record territory due to drought in the U.S. farm belt (Reuters).

The worst U.S. drought in more than half a century will spur Japan, the world’s biggest corn importer, to buy a record amount from Brazil after record prices increased costs for feed makers and meat producers (Bloomberg).

The Brazilian government will spend 30.4 million Reais (15.05 million dollars) to buy 76,000 metric tons of excess live swine, through a minimum-price plan created to help Brazilian producers get out from under a national oversupply of pork, the Ministry of Agriculture announced (MercoPress).

AUTOMOTIVE

French automaker Renault SA said it plans to expand the capacity of its Brazilian motor plant by 25 percent by 2013, extending a string of recent investments despite concerns about rising costs in Latin America’s largest economy. Olivier Murguet, the company’s top executive in Brazil, noted that increasing costs were eroding the competitiveness of manufacturing in the country and raising doubts about future investments (Reuters).

Brazilian auto sales set a second straight monthly record in July, an industry source with access to sales data said, as tax breaks and lending incentives helped the car industry turn the corner on a weak first half. Sales of cars and light trucks climbed 22 percent in the month from a year ago to some 351,000 vehicles, up 3 percent from a record June to the best July ever (Reuters).

AVIATION

Brazilian plane maker Embraer is facing rising pressure to lower the price of  its regional E-Jets to land new orders, its chief executive said, as a weaker global economy and stiffer competition drag on sales (Reuters).

Embraer announced an agreement with Venezuela’s Conviasa Airlines for the sale of six Embraer 190 jets. The deal also includes 14 purchase options for the same aircraft model. The value of the order, at list price, is USD 271.2 million, based on January 2012 economic conditions, and could total as much as USD 904 million, if all of the options to buy are confirmed. The first deliveries are scheduled to take place by the end of 2012 (Embraer).

BANKING & FINANCE

Brazilian-Swiss private bank Safra said it had successfully completed  its acquisition of Dutch cooperative Rabobank’s stake in Bank Sarasin, taking  control of its Swiss rival (Reuters).

Brazil’s state development bank BNDES plans to speed up the pace of loan disbursements through 2015 to help kick-start economic growth (Reuters).

MINING & STEEL

Robust output and sales in Brazil helped steelmaking giant Gerdau post second-quarter net income that beat analysts’ estimates, as the world’s No. 2 producer of long steel products foresees a gradual recovery in its home market (Reuters).

Brazilian mining regulator DNPM reduced the past royalties bill it considers  owed to the government by miner Vale by 600 million reais ($300 mln), a high  level source in the agency said (Reuters).

Anglo American Plc, proposing to spend as much as $100 billion on doubling mine output, met President Dilma Rousseff to seek an end to obstacles facing the industry as delays at its largest project worsened. “These are blockages that we didn’t anticipate,” Chief Executive Officer Cynthia Carroll, who held talks with Rousseff. Anglo posted a 46 percent drop in first-half profit and now expects its Minas-Rio iron-oreproject to start shipments in the second half of 2014 or later, after targeting the last six months of 2013 (Bloomberg).

OIL & GAS

Petrobras and BP found oil in a deep-water offshore well in a new ar ea for exp loration off Brazil’s northeast coast, the company said in a securities filing (Reuters).

Brazil’s oil and natural gas output fell 2.9 percent in June to an average of  2.486 million barrels a day as rising gas production failed to compensate for a  decline in crude oil volumes, the ANP, Brazil’s petroleum regulator said (Reuters).

A Brazilian court has ordered Chevron Corp and Transocean Ltd to suspend all oil  production and transport operations in Brazil while prosecutors investigate a November oil spill, a decision that could halt nearly 10 percent of all offshore drilling operations in South America (Reuters).

Petrobras imported 13 percent more gasoline in the first half of 2012 than a year earlier, Chief Executive Officer Maria das Graças Foster told Reuters.

Solange Guedes, executive manager of Petrobras Exploration and Production, announced that they will invest US$5.6 billion in the Programa de Aumento da Eficiência Operacional da Bacia de Campos (Program for Increasing Operational Efficiency in the Campos Basin, PROEF) by 2016 (The Rio Times).

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