Shoppers in Brazil in front of a watch store

Type “Latin America” and “booming middle classes” into Google and you will get more than 40,000 results. The rise of millions of Latin Americans out of poverty over the past decade has defined the region socially, politically and economically. It has also made investors rich.

However, as Moody’s explains in a report on Tuesday, the middle class-led consumer “boom” is coming to an end and, for some companies in particular, the results won’t be pretty. Continue reading »

Dilma Rousseff is an impressive woman. Under Brazil’s military dictatorship she was held in prison for three years, where she was beaten, tortured with electric shocks and hung upside down for long periods of time. After rebuilding her life, she was elected the first female president in Brazilian history in 2010, setting an example for generations of women to come.

However, in her first official campaign video ahead of October’s elections this week, Dilma has been reincarnated as a…housewife. Continue reading »

If anyone had any doubts about the political significance of the tragic plane crash that killed presidential candidate Eduardo Campos last week, they only need to see the results of Monday’s Datafolha poll.

Marina Silva, who is set to take over as candidate for the Brazilian Socialist party (PSB), attracted over twice as much support as Mr Campos did before he died and now stands a real chance of winning October’s elections. Continue reading »

Brazil’s humiliating 7-1 loss to Germany in the World Cup semi-finals was bad enough but now it looks like the country’s economy may also be heading for a similarly crushing defeat. While annual inflation is creeping up towards 7 per cent, most economists now forecast GDP growth this year of little more than 1 per cent.

Faced with this gloomy scenario, Brazil’s central bank will have little choice but to do precisely nothing at its interest rate meeting this week. Continue reading »

Luiz Felipe Scolari

Historic humiliation! Historic disgrace! Historic defeat! Worst in 94 years!

The headlines across Brazil’s newspapers on Tuesday night left no doubt: the country’s devastating 7-1 loss to Germany in the World Cup semi-finals will make Brazilians wince for generations.

There was little anger, few accusations and – perhaps surprisingly – barely any mention of Brazil’s absent star player Neymar or the Colombian defender Juan Zúñiga who broke the Brazilian’s back last week and took him out of the tournament. Instead, the mood was solely of utter despair.

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After months of speculation and the world’s longest tightening cycle, it looks like Brazil may finally be done increasing interest rates.

Late on Wednesday, the bank raised Brazil’s Selic rate another 25 basis points to 11 per cent – the highest level in more than two yearsContinue reading »

Imagine you’re Brazil’s central bank president, Alexandre Tombini.

It’s an election year and your boss is Dilma Rousseff. Growth is slowing and high interest rates are boosting debt servicing costs for voters who are up to their eyeballs in debt. Continue reading »

The Eike Batista yard sale is not over just yet, it seems.

Brazil’s former richest man is expected to conclude as early as this week the sale of his 33 per cent stake in the country’s treasured semiconductor venture, SIX Semicondutores. The buyer is Argentine billionaire Eduardo Eurnekian, head of the holding company Corporación América. Corporación América confirmed it was in the final stages of buying the stake after Eurnekian visited the site of the half-finished semiconductor plant in Brazil’s Minas Gerais state on Monday. Eike’s EBX group did not respond to requests for comment. Continue reading »

It’s been another record-breaking day for Brazil, but not in a good way. After data on Tuesday showed car sales fell in 2013 for the first time in a decade, a report from Brazil’s central bank on Wednesday showed the country also recorded the biggest dollar outflow in over 10 years.

Net dollar outflows totalled $12.26bn last year – the largest exit of dollars since 2002 when the election of leftist President Luiz Inácio Lula da Silva caused investors to flee the country. Continue reading »

When the clock struck midnight on New Year’s eve this week, Brazilian President Dilma Rousseff probably breathed a huge sigh of relief – 2013 was certainly a year to forget.

The biggest protests in 20 years swept the country, jeopardising her chances of re-election. The country’s most celebrated entrepreneur, Eike Batista, lost investors billions before filing for bankruptcy, triggering Latin America’s largest-ever corporate default. Continue reading »

If Dilma Rousseff hadn’t been too busy hosting the French president on Friday she probably would have been doing a victory lap around Brasília on the back of somebody’s motorbike.

After an onslaught of negative economic news over the past few months, data on Friday showed activity rose more than expected in October. The central bank’s IBC-Br index rose 0.77 per cent in October from September, compared to an estimate of 0.5 per cent from analysts surveyed by Reuters. Continue reading »

Dilma Rousseff

Dilma Rousseff

It has become one of Brazil’s longest-running soap operas, or ‘telenovelas’: where is the country going to buy its new fighter jets?

Brazil has been talking about refurbishing its air force for more than a decade now, flaunting around a contract for 36 fighter jets that is seen as one of the most coveted deals in the global defence industry. While the contract itself is estimated to be worth at least $4bn, maintenance and follow-on deals would be worth even more. Continue reading »

When Vale agreed to settle multi-billion dollar tax claims this week, Brazil’s President Dilma Rousseff must have breathed a huge sigh of relief.

After all, she really needs the cash. That became more evident than ever on Friday when the country posted its smallest primary budget surplus for the month of October on record.

Central bank data showed a primary budget surplus of only R$6.2bn ($2.7bn) last month – the lowest figure for October since authorities started tracking the data in 2001 and far below economists’ median estimate of R$9.75bn, according to Reuters.

While that came as a nasty surprise it was not totally unexpected. Brazil’s public finances have been deteriorating for a while as the government remains reluctant to reduce spending ahead of presidential elections next year. Continue reading »

Brazil’s central bank has increased its benchmark interest rate by 50 basis points to 10 per cent, as expected.

Here’s the accompanying statement:

Giving continuation to the adjustment of the benchmark interest rate, which began with the meeting in April 2013, the Copom (central bank’s monetary policy committee) decided unanimously to raise the Selic rate to 10 per cent a year, without bias.

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Well, it was fun while it lasted, but it seems that Brazil’s brief affair with low interest rates is over. The country’s central bank is widely expected to raise the benchmark Selic rate by 50 basis points to 10 per cent late on Wednesday, pushing it back into double digits for the first time since March of last year.

The move in itself is welcome — 12-month inflation in the month to mid-November came in at 5.78 per cent. That may be better than previous months, but it is still a long way off the country’s 4.5 per cent target.

However, Brazil’s monetary policy U-turn does raise several questions. Continue reading »