“If you see ten troubles coming down the road, you can be sure that nine will run into the ditch before they reach you.”
For about two weeks in late October, it seemed as if these optimistic words from Calvin Coolidge, the former US president, might have encapsulated the mindset of emerging market (EM) investors.
But the late October rally in EM financial assets has now stalled. Investors are relinquishing hopes that market troubles may turn out to be mere phantoms and focusing again on the very real problems coming their way. Four of the most intractable are set out below. Read more
Brazil’s economy is, by the standard definition, in recession. Its GDP contracted 0.6 per cent in the second quarter from the first, while the first quarter figure was revised to a contraction of 0.2 per cent form the previously reported 0.2 per cent growth.
The year on year figures were even worse: a 0.9 per cent contraction compared with the second quarter of 2013. Still, as Joe Leahy reported for fast FT, employment seems to holding up so the performance of the economy may not completely derail President Dilma Rousseff’s chances of re-election in October. Read more
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. Read more
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. Read more
Source: central bank
Another week, another deterioration in Brazil’s economic outlook. The consensus forecast for economic growth this year, according to the central bank, has fallen to just 1.44 per cent, from 1.5 per cent last week and 1.69 per cent four weeks ago.
The forecast for next year has also fallen, to 1.8 per cent, down from 1.85 per cent last week and 1.9 per cent four weeks ago.
With the World Cup starting this week and October’s elections heaving into view, this will not be welcome news in Brasília. Read more
Some good news at last for the beleaguered Brazilian government: GDP growth in 2014 was 2.3 per cent, including 0.7 per cent in the fourth quarter, beating surveys by Reuters and Bloomberg which both had a consensus for 0.3 per cent in Q4.
Among those heaving sighs of relief will be the central bank, whose widely-followed GDP indicator, the IBC-Br, had suggested a marginal contraction in activity in the fourth quarter, which would have put Brazil into a technical recession (two consecutive quarters of contraction). Read more
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. Read more
Tuesday’s release of Brazil’s latest GDP figures was bad enough on its own: third quarter growth came in much lower than expected, delivering the worst quarter for five years. But it contained an added element of badness for Guido Mantega, finance minister, who has reportedly had his ear burnt by his famously straight-talking boss, president Dilma Rousseff.
Why? Mantega’s ministry told Dilma’s office last week that GDP growth in full year 2012, previously reported at a measly 0.9 per cent, would be revised upwards to a more respectable 1.5 per cent – something Dilma made much of. And then Tuesday’s figures spoiled it all. Read more
Brazil’s government sure knows how to keep investors on their toes. In an interview with Spain’s El País newspaper, President Dilma Rousseff dropped the following bombshell: Brazil actually grew 1.5 per cent last year, not the reported 0.9 per cent. Read more
No one paid much attention when Brazil’s finance minister, Guido Mantega, reduced the government’s official growth forecast to 3 per cent from 3.5 per cent on Monday. Local newspapers barely mentioned his prediction and there was little trace of the announcement on Twitter. And it’s hardly surprising.
Over the past couple of years the minister has become the butt of jokes – both in Brazil and abroad – for his serial optimism when it comes to estimating the country’s growth rate. Read more
The estimates for economic growth in Brazil this year – and next – continue to tumble after last week’s weaker-than-expected first quarter growth.
A weekly survey by the central bank of 100 economists showed they had lowered their forecasts for 2013 to 2.77 per cent from 2.93 per cent the prior week. Read more
Imagine being in the shoes of Brazil’s central bank president Alexandre Tombini (pictured) on Wednesday. Beyondbrics pictures the scenario as something like this:
Mr Tombini was sitting at his desk reading the newspapers this morning and thinking about tonight’s regular meeting of the monetary policy committee, known as Copom. “I think I will argue for a 50 basis point rise tonight. After all, inflation is hovering near the top of our admittedly already generous range of 4.5 per cent plus or minus 2 percentage points and it’s time to show that we mean business.” Read more
Brazil on Wednesday released its first quarter GDP figures and they don’t make for a pretty reading.
For the fifth consecutive quarter, growth in Latin America’s largest economy fell short of market expectations. The economy expanded just 0.55 per cent compared to the previous three months, or 1.9 per cent year-on-year. A Bloomberg analyst poll had predicted 0.9 per cent growth compared with the previous quarter. Read more
Brazil will grow by 3 to 4 per cent in 2013! And that’s on the authority of Guido Mantega, finance minister, aka Guido the Forecaster, so it must be true.
It’s understandable that Mantega would want to put a brave face on things after the IBGE, Brazil’s statistics agency, published another set of disappointing growth figures on Friday. But with GDP growing just 0.9 per cent in 2012 – rather less than Mantega’s initial and persistent projections of 3 to 4 per cent – his relentless optimism is doing nothing for the government’s credibility. Read more
By Tony Volpon of Nomura
Why has growth in Brazil been so disappointing these past two years, falling from 7.5 per cent in 2010 to below 1 per cent in 2012? There are two competing responses. The first, favored by the government, puts the blame mainly on external factors, such as the European crisis and the growth slowdown in China. The second emphasizes supply-side constraints, whether in poor infrastructure or tight labor markets.
Though these two explanations are not mutually exclusive, they are hard to fully square up with the data. Read more