Continuing Economic Troubles

Brazil’s terrible fall from economic grace
Financial Times, September 14
“The economy is in a mess. Brazil’s worst recession since the Great Depression will see the economy shrink by as much as 3 per cent this year, and 2 per cent in 2016. Public finances are in disarray: this month, the government, for the first time since the onset of democracy, forecast it would post a primary fiscal deficit, the budget balance before interest payments. The actual budget deficit is already a yawning 9 per cent of output. As a result, debt levels are growing again.”

Brazil’s economy will likely get worse before it gets better
MarketWatch, September 10
“Brazil is experiencing its worst economic downturn in 25 years. And, analysts say, it’s going to get worse before it gets better.

Standard & Poor’s Ratings Services suggested as much when they downgraded the country’s foreign-currency sovereign debt by a notch to ‘BB+,’ leaving it in junk territory for the first time since 2008.”

Industrial Output Tumbles
Reuters, September 2
“Brazilian industrial output sank at a much steeper pace than expected in July, portraying a deeper recession after a string of interest rate increases, tax hikes and spending cuts by President Dilma Rousseff’s government.
Industrial production in Brazil fell 1.5 percent in July from June, the sharpest rate of decline since the beginning of the year and far below even the most pessimistic forecast in a Reuters poll.”

Surge in Foreign Equity Outflows
Reuters, September 2
“Foreign investors pulled the most money out of Brazil’s cash equity markets in more than two years in August, as signs of a steeper-than-expected slowdown in China and mounting political and market turmoil in Latin America’s largest economy undermined the appetite for stocks.”

Gloomy Reality Dawns on Brazil
Financial Times, August 25
“Latin America’s largest economy has fallen into its biggest recession since the Great Depression, hit by a triple whammy of lower commodity prices, a multibillion-dollar corruption scandal at state-controlled oil company Petrobras, and a political crisis that has made Ms Rousseff the most unpopular president in Brazilian democratic history.”

Rising Unemployment Adds to Economic Turbulence
The Wall Street Journal, August 20
“Brazil’s unemployment rate surged to a five-year high last month and came in far above forecasts as the country’s troubled economy likely took a turn for the worse.”

Country’s Political Scandal Interrupts Business Activity
Bloomberg Business, August 17
“In the midst of its deepest economic and political crisis in a generation, Brazil is contending with a business climate so punishing that major projects across numerous sectors are being frozen or shrunk, while small businesses slash prices and shift focus.”

 

A Few Bright Spots Emerge

Despite Economic Woes, Brazil’s Agribusiness Still Booming
Rio Times, September 14
“The country’s grain and cereal production is expected to grow and government officials announced the opening up of new export markets for Brazilian goods.”

A Silver Lining to Brazil’s Troubles
New York Times, September 5
“The economy is in tatters, but the country’s handling of a huge corruption case shows its democracy and judicial institutions are working.”
“Corruption is such a part of public life,’ says Riordan Roett, the director of Latin American Studies at Johns Hopkins School of Advanced International Studies. ‘But now people are being held accountable. There is a sense that things could actually change.’”

Compelling Reasons to Maintain Faith in Brazil
Reuters, September 2
“Despite these mounting troubles and a worsening of the situation in the near term, there are a few bright spots in Brazil. The first is that Brazil’s institutions work. The current turmoil, which is driven by deep political and economic difficulties, does not constitute an institutional crisis.”

Brazil Proves that It’s Still Ahead of the Game in Certain Respects
Financial Times, August 20
“Corruption scandals are now being prosecuted more quickly in Latin America – largely because prosecutors and citizens are building on the investigations that probed the region’s human rights abuses of the recent past. Standards have shifted.
Brazil, with its relatively strong legal institutions and hard-wired belief in freedom of expression, seems to understand this. Mexico, with weaker institutions and a younger democracy, does not.”

Brazil Steps Up Cooperation with Germany, a Key Trading Partner
The Rio Times, August 23
“The two day visit by German Chancellor, Angela Merkel, to Brazil last week proved fruitful for the South American country, with cooperation agreements being signed in the environment, food, trade and world security. Merkel visited Brazil with several of her key cabinet members, who were received by their Brazilian counterparts. Along the official entourage dozens of German executives also came to Brazil to talk about investments.”

Energy Developers Bet on Brazil’s Future
Bloomberg Business, August 21
“Wind developers are showing more confidence in Brazil, selling six times as much power through an energy auction Friday as they did in April.”

 

Curated by John Metcalfe, Geoskope Junior Associate