Brazil

With only a couple of weeks left in the year, Brazil watches are still revising downward their view on GDP growth for 2014. The central bank’s latest weekly survey of about 100 market economists has GDP growth coming in at a feeble 0.16 per cent this year, down from 0.18 per cent a week ago and 0.21 per cent a month ago. The consensus for 2015 is also sliding: just 0.69 per cent growth is expected in this week’s report, down from 0.73 per cent last week and 0.8 per cent a month ago.

Those looking for a silver lining to this darkening cloud may argue that it reflects a conviction among analysts that Brazil’s new economics team under Joaquim Levy at the finance ministry (pictured above) is serious about reining in the public deficit and that this, while positive in the long term, will dampen growth in the interim. Read more

Brazilian real notesBrazilian officials are accustomed to shrugging off the country’s debt levels by comparing them with those of much more heavily indebted Europe.

Although this misses the point – Brazil’s public debt is more burdensome than in most other countries because it has some of the highest interest rates in the world – the argument is doubly wrong if a new study by Moody’s is to be believed. Read more

There are plenty of misconceptions about Brazil. Many Brazilians have no interest in football, can’t stand samba and would rather spend the weekend in a shopping centre than on the beach. They certainly don’t speak Spanish. When it comes to the economy, though, perhaps one of the biggest myths about the country is that Brazil has an inflation target of 4.5 per cent.

Officially, the Brazilian central bank’s annual inflation target has been 4.5 per cent ever since 2005. However, in reality, inflation data show Brazil has actually been working with a target closer to 6 per cent for the past few years. Read more

A reminder for Brazil’s new finance minister, if he needed one, of the task ahead: the country’s manufacturing purchasing managers’ index, prepared by Markit Economics for HSBC, fell from 49.1 to 48.7 in November, its lowest level in 16 months.

November’s PMI followed the central bank’s weekly survey of market economists, also out on Monday, which showed the consensus on GDP growth falling yet again, to 0.19 per cent this year and to 0.77 per cent in 2015. Read more

By Monica Baumgarten de Bolle of the Woodrow Wilson Center for International Scholars

President Dilma Rousseff’s soon to be announced new finance minister may mark an important shift in Brazil’s faltering macroeconomic framework: From the ill-fated experimentalism that culminated in the so-called “New Economic Matrix”, brain child of Minister Guido Mantega, to newfound orthodoxy. From a failed model based more on ideology than economics to more rational policymaking, this is what one should expect from Joaquim Levy’s appointment, widely expected to be confirmed on Thursday. How long it all lasts is another matter altogether. Read more

It was close, but they didn’t make it. The political fixers of Brazil’s government had hoped to push through a bill on Wednesday that would have removed its obligation to meet a target of a primary fiscal surplus (before debt payments) of 1.9 per cent of GDP in this year’s budget.

The hope was that the bill would have been passed in time for the expected announcement on Thursday of a new economics team, widely tipped to be led by Joaquim Levy as finance minister. Success would, in a way, have swept out the old team’s jiggery pokery over public accounts before ushering in the new brooms of team Levy. Now it will just have to be done after the event. Read more

An index of confidence among Brazilian manufacturers suggests things aren’t as grim as all that, after an index of consumer confidence published on Tuesday hit a post-crisis low.

But the uptick in the manufacturing confidence index produced by the Fundação Getulio Vargas – the same academic institution that prepared the consumer index – does not bear close inspection.

Source: FGV/IBRE. Click to enlarge

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Another reminder of the challenges facing Dilma Rousseff as she struggles to put together an economic team for her second term in office: consumer confidence is at its lowest ebb since the depths of the global financial crisis in December 2008.

Source: FGV/IBRE

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Is Brazil’s Workers’ Party, victorious in last month’s elections, ready to back any decision by President Dilma Rousseff to hire Joaquim Levy as finance minister?

Speculation over his likely appointment leaked last Friday into local media, sending financial markets higher.

With a doctorate in economics from the University of Chicago and a previous successful stint as treasury secretary under former President Luiz Inácio Lula da Silva in 2003, Levy seems to be exactly the type of professional that financial markets were hoping might be appointed. Read more

By Marcos Troyjo of Columbia University

As Dilma Rousseff struggles to assemble a new economic team after the bitter political strife that led to her re-election by a thin margin, a tension has built up between continuity and change.

The divide between the “more of the same”, “nothing is wrong” discourse that Dilma’s marketing gurus had her voice during the campaign and the no-nonsense imperatives of economic reality that compel her to shift course is now a major cause of dispute in her own political support base. Read more

The plot thickens over the choice of Brazil’s next finance minister.

On Thursday, business daily Valor Econômico reported that President Dilma Rousseff had invited Luiz Carlos Trabuco Cappi, head of the non-government bank Bradesco, to replace Guido Mantega next year. According to the newspaper, Rousseff met with Lázaro Brandão, president of Bradesco’s board, on Tuesday this week to discuss the matter. With Brandão on side, it would make it easier for Trabuco to accept the position and then return to the bank in the future, the daily said. Read more

Brazil and Mexico, Latin America’s two biggest economies, are engulfed in high-profile scandals that have involved their presidents and also touched on investor interests. So far, Dilma Rousseff has made a better fist of handling the fallout in Brazil than Enrique Peña Nieto has in Mexico – although that could easily change. Read more

Ministers resign all the time and there’s nothing unusual about one of them handing in his or her notice as the head of government is preparing to unveil a new cabinet for a second term in office. But Marta Suplicy’s resignation as Brazil’s minister of culture on Tuesday had a peculiar sting in the tail.

After the usual stuff about how happy she was to have achieved all she had done in the job, Suplicy delivered what journalists sometimes refer to as a “nut paragraph”: Read more

When Dilma Rousseff was re-elected as president of Brazil on October 26, she promised to be a much better president than she had been during her first term (which ends on December 31). Whatever she meant by that, analysts do not seem to believe it will result in a pick up in economic growth. The central bank’s latest weekly survey of market economists, on the contrary, shows the consensus on GDP growth this year falling to just 0.2 per cent (the black line in the chart) and that for 2015 falling to a not much better 0.8 per cent (the red line). Read more

What you see above is a graphic representation of something anyone who followed the campaign that led to the re-election of Dilma Rousseff as Brazil’s president on October 26 already knows: the election was the most polarised in the country’s history.

Brasil was split down the middle, not only numerically (Dilma got 52 per cent, Aécio Neves 48) and geographically (Dilma won in the less developed north, Aécio in the more prosperous south). The twitterspere, too, was divided into two camps. Not only that; they hardly talked to each other at all. Read more