Brazil economy

The weekly survey of market economists by Brazil’s central bank is becoming the economic equivalent of a limbo dance: each time around, just that little bit lower. This week’s edition has GDP growth in 2014 coming it at just 0.81 per cent, making 11 consecutive weeks of contraction. The outlook for 2015, which had been unchanged for five weeks at 1.5 per cent, has also come down, to 1.2 per cent.

Voters, though, don’t seem to be bothered. Continue reading »

How much lower can it go? The consensus on Brazil’s economic growth this year has been revised downwards for nine successive weeks, according to the central bank’s latest survey of market economists, and now stands at a meagre 0.9 per cent.

The consensus on growth next year is not much better, at 1.5 per cent. As our chart shows, estimates of growth this year (the black line) and next have been in decline for the past 12 months. (Longer, in fact. When the bank first asked economists about growth in 2014, they expected it to come in at 3.8 per cent.) 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 »

As Joe Leahy reported at the weekend, the back injury suffered on Friday by Neymar, Brazil’s star striker, is unlikely to hurt President Dilma Rousseff in her bid for re-election in October. She may even benefit, as the nation bonds together in grief or – there is, after all, still a chance – in celebration.

But Rousseff should forget Neymar. Come October, Brazilians will likely be much more worried about the economy. And here, Rousseff has plenty to fear. Continue reading »

Grupo Lala, which controls about half of Mexico’s dairy market, has been running a World Cup promotion to give consumers the chance to win tickets to Brazil. Now, it seems, it could have been eyeing Latin America’s biggest market itself.

According to Bloomberg, Lala is keen to buy BRF’s (Brazil Food) dairy business in Brazil, which the company has reportedly been hawking to potential buyers. Continue reading »

The mood in Brazil has no doubt brightened after Monday night’s convincing win over Cameroon in the World Cup. On that showing, Brazilians will have plenty to cheer about over the next few weeks. At some point, however, they face the morning after.

A survey to be published tomorrow by LatAm Confidential, a research service at the FT, shows consumer confidence sinking to its lowest level since the survey began in February 2012. It follows a central bank survey of market economists on Monday in which the consensus on growth fell to a new low. After so much flair on the pitch, many Brazilians will be left wondering why the spark has gone out of their economy. Continue reading »

Will the consensus on Brazil’s economy never bottom out? For the third week in a row, market economists have cut their outlook for GDP growth this year, to 1.24 per cent, according to a central bank survey. That’s down from 1.44 per cent last week and 1.62 per cent four weeks ago.

The consensus for next year is down, too, to 1.73 per cent, from 1.8 per cent last week and 2 per cent four weeks ago. Continue reading »

Brazil’s economy may be weakening but sales of some luxury car marques in the country are soaring in a sign of the enormous pent-up wealth in Latin America’s biggest country.

Germany’s Audi said sales in the first five months of this year more than doubled compared with the same period last year to a record of more than 5,000 units while those of BMW were up 24-25 per cent in the same interval to 6,100. Continue reading »

Last week, Alexander Lukashenko, president of Belarus, bafflingly announced he would sign a decree that would return to the status quo in 1861 and reinstate serfdom. When it comes to backsliding on economic modernisation, Mr Lukashenko is clearly a world-beater.

Yet other emerging markets, while not actually going backwards, have shown little enthusiasm in recent years for bold policy moves to streamline regulation, tackle corruption, improve the legal environment and, most particularly, build the infrastructure needed for a modern economy. Continue reading »

By Stephany Griffith-Jones, Columbia University

Leaders of the BRICS (Brazil, Russia, India, China and South Africa) nations are committed to the creation of a new Development Bank for infrastructure and sustainable development. Details of the bank’s operations are expected at the forthcoming BRICS summit to be held in Brazil this July.

The bank is set to play an important role in helping to meet needs for an estimated US$1tn or more in annual investments in infrastructure and sustainable development. The future growth prospects of the BRICS countries will depend in large measure on these investments materialising.

What are the likely challenges this institution will face as it moves from the design to the operational stage? Continue reading »

Source: central bank (click to enlarge)

Market economists have sharply downgraded their outlook for Brazilian growth this year to just 1.5 per cent from an already-anaemic 1.63 per cent, according to a weekly survey of about 100 economists conducted by the central bank. The consensus for 2015 has also fallen, to 1.85 per cent from 1.96 per cent a week earlier. (Our chart is from the central bank report: PIB is GDP; the black line traces the evolution of the outlook for 2014, the red line for 2015.) Continue reading »

By João Carlos Ferraz of the BNDES

The debate about Brazilian development has reached a consensus: investment is the key to a rebound. This is an interesting and very welcome phenomenon as economic analysts very seldom come to similar conclusions. However, when discussing development financing and the contribution of the country’s development bank, the BNDES, this debate has been largely characterised by shallow analysis, with extensive use of expressions with minimum substance, yet very conclusive in defining a negative role for the BNDES in pulling investment upwards. This has resulted in unproductive and even unfair attacks on one of the country’s institutions that has most effectively contributed to Brazil’s development. Continue reading »

When in 2007, Fifa president Sepp Blatter awarded Brazil the right to host the 2014 World Cup, Brazilians celebrated like they had won the final already.

So why is that – with only 14 days to go before the kick-off at São Paulo’s Itaquerão stadium – people do not seem more animated? Brazilians seem to be moving slower than in the past with their normally effusive efforts to decorate everything in yellow and green, the colours of Brazil’s Seleção, the national teamContinue reading »

The monetary policy committee of Brazil’s central bank on Wednesday night voted to keep its benchmark interest rate unchanged at 11 per cent.

The move ended a tightening cycle that began in April last year. Continue reading »

By Márcio Garcia of PUC Rio

Another R$30bn ($13.5bn) in long-term loans will be given this year by Brazil’s National Treasury to the BNDES, the government-owned National Bank for Economic and Social Development. These transfers are made at a highly subsidised interest rate, called the TJLP, currently 5 per cent a year, while the central bank’s base rate, the Selic, is currently at 11 per cent. The Treasury’s transfers to government-owned banks, initiated in 2008, currently amount to almost 10 per cent of GDP, of which R$414bn has gone to the BNDES. These resources are lent by the BNDES to corporations, also at subsidised rates.

Nonetheless, Brazil’s investment to GDP ratio remains anaemic. Continue reading »