A decision by the Brazilian Government reduced the difference between the investment rate and the redemption rate to 0.01% per year. The intention is to end the handicap in the short term of Tesouro Selic.
Previously, the difference between the investment rate and the redemption rate was 0.04%. The measure, announced on April 5, aims to end the fact that, in the short term, buying and selling government securities (Tesouro Selic or Tesouro Direto) yielded less than savings.
In Brazil, the Tesouro Selic is remunerated by the basic interest rate, the Selic, which currently stands at 6.5% per year. Savings yields 70% of the Selic, equivalent to 4.55% per year.
Saturday, 6 April 2019
Friday, 5 April 2019
Multimarket funds lose money with tumultuous scenario of Brazilian politics
The constant crises and lack of political skill of Jair Bolsonaro's government led the Brazilian Financial Market to re-evaluate and recalculate the risks of the current administration.
A study made by SmartBrain on Brazilian multimarket funds, covering the period of the new government, indicated that multimarket funds began the year very optimistic with a possible liberal policy and reduction of the state sold during the political campaign by then-candidate Jair Bolsonaro.
The oscillation and the altercations between the Executive Power and the Legislative Power in Brazil led the funds to lose money. Only 28% of the funds had positive returns in the first months of the Bolsonaro administration.
As nothing indicates any change in the directions of inflation and as promises and expectations about the new government did not occur, the funds that stood for economic growth ended up losing money.
A turmoil in the political scene made the funds change to dólar. Therefore, the funds that were betting on the "kit Brazil" (appreciation of the Brazilian currency, investment in the Stock Exchange and the fall of the Brazilian interest rate) lost money.
A study made by SmartBrain on Brazilian multimarket funds, covering the period of the new government, indicated that multimarket funds began the year very optimistic with a possible liberal policy and reduction of the state sold during the political campaign by then-candidate Jair Bolsonaro.
The oscillation and the altercations between the Executive Power and the Legislative Power in Brazil led the funds to lose money. Only 28% of the funds had positive returns in the first months of the Bolsonaro administration.
As nothing indicates any change in the directions of inflation and as promises and expectations about the new government did not occur, the funds that stood for economic growth ended up losing money.
A turmoil in the political scene made the funds change to dólar. Therefore, the funds that were betting on the "kit Brazil" (appreciation of the Brazilian currency, investment in the Stock Exchange and the fall of the Brazilian interest rate) lost money.
The number of poor people in Brazil grows
According to the World Bank, the crisis that hit Brazil between 2014 and 2017 increased from 17.9% to 21% the percentage of Brazilians living with less than US$ 5.50 per day.
In addition, the poor economic performance of Brazil, Argentina, and Mexico, coupled with the very serious situation in Venezuela, led the World Bank to revise its expectation of Latin American economic growth in 2019 to 0.9%.
In Brazil, the picture of increasing misery pointed out by the World Bank is compounded by high unemployment rates.
A survey by the Center for Management and Strategic Studies (CGEE) of the Brazilian Ministry of Science, Technology, Innovation, and Communications pointed out that the number of Brazilians with unemployed PhDs reaches 25%. In the world, the unemployment rate of this group is around 2%. In Brazil, the unemployment rate among people with a master's degree reaches 35%.
In the semester closed in February 2019, unemployment in Brazil stood at 13.1%, according to data released by the Brazilian Institute of Geography and Statistics (IBGE). With 27.9 million underutilized workers, the underutilization of the workforce has reached a record in the IBGE's history series.
In addition, the poor economic performance of Brazil, Argentina, and Mexico, coupled with the very serious situation in Venezuela, led the World Bank to revise its expectation of Latin American economic growth in 2019 to 0.9%.
In Brazil, the picture of increasing misery pointed out by the World Bank is compounded by high unemployment rates.
A survey by the Center for Management and Strategic Studies (CGEE) of the Brazilian Ministry of Science, Technology, Innovation, and Communications pointed out that the number of Brazilians with unemployed PhDs reaches 25%. In the world, the unemployment rate of this group is around 2%. In Brazil, the unemployment rate among people with a master's degree reaches 35%.
In the semester closed in February 2019, unemployment in Brazil stood at 13.1%, according to data released by the Brazilian Institute of Geography and Statistics (IBGE). With 27.9 million underutilized workers, the underutilization of the workforce has reached a record in the IBGE's history series.
Thursday, 4 April 2019
Paulo Guedes, Brazilian Minister of the Economy, denies requests from automakers and maintains free trade in auto parts with Mexico
Brazil is one of the largest car producers in the world. In February 2019, the country produced 257.2 thousand cars light commercial vehicles, trucks, and buses, accumulating a growth of 5.3% in the first two months of the year, reaching 455.3 thousand units.
Paradoxically, car prices in Brazil are among the highest in the world. In some cases, there are cars that cost more than 100% than in other countries. Among the main reasons for such prices are the very high-profit margins of resellers, taxes and infrastructure problems in the country.
The current Minister of Economy of Brazil believes that some of these problems can be solved with more economic openness.
Last March 29, in a meeting with representatives of the country's three largest automakers (General Motors, Fiat and Volkswagen), Guedes said he would not reestablish the quota system that regulated the automotive trade between Brazil and Mexico, believing that it was time for the country to open its economy.
The representatives of the automakers were criticized by government officials during the meeting, who would have said that the automakers had received R$ 20 billion in subsidies in the last five years. Since March 19, cars and auto parts circulate between Brazil and Mexico without import tariff. Now, the two countries will be able to export and import those products without any barriers.
The Brazilian sectors of Foundries, Auto parts and Assemblers will face a real "competition shock", since these sectors in Mexico are among the most competitive in the world. Therefore, there is a fear on the part of the Brazilian automakers that the parent companies prefer to invest in Mexico instead of Brazil.
In February 2019, Ford announced the closure of its São Bernardo plant in the state of São Paulo, where 3,000 people work, and the company's exit from the South American truck market. Thus, the company's North American headquarters decided to close its subsidiary in São Bernardo.
Paradoxically, car prices in Brazil are among the highest in the world. In some cases, there are cars that cost more than 100% than in other countries. Among the main reasons for such prices are the very high-profit margins of resellers, taxes and infrastructure problems in the country.
The current Minister of Economy of Brazil believes that some of these problems can be solved with more economic openness.
Last March 29, in a meeting with representatives of the country's three largest automakers (General Motors, Fiat and Volkswagen), Guedes said he would not reestablish the quota system that regulated the automotive trade between Brazil and Mexico, believing that it was time for the country to open its economy.
The representatives of the automakers were criticized by government officials during the meeting, who would have said that the automakers had received R$ 20 billion in subsidies in the last five years. Since March 19, cars and auto parts circulate between Brazil and Mexico without import tariff. Now, the two countries will be able to export and import those products without any barriers.
The Brazilian sectors of Foundries, Auto parts and Assemblers will face a real "competition shock", since these sectors in Mexico are among the most competitive in the world. Therefore, there is a fear on the part of the Brazilian automakers that the parent companies prefer to invest in Mexico instead of Brazil.
In February 2019, Ford announced the closure of its São Bernardo plant in the state of São Paulo, where 3,000 people work, and the company's exit from the South American truck market. Thus, the company's North American headquarters decided to close its subsidiary in São Bernardo.
Wednesday, 3 April 2019
Speech of Brazilian Economy Minister in Congress overturns Stock Market
The Ibovespa, the main index of the Brazilian Stock Exchange, ended the day falling 0.94%, to 94,491.48 points. This is the lowest level in a week.
This change in the behavior of the Financial Market was a fruit of the defense of the Pension Reform, in the Chamber of Deputies, made by the Minister of Economy, Paulo Guedes.
The minister, who had already discussed harshly with Senator Kátia Abreu during his defense of the Pension Reform in the Brazilian Senate last week, was again criticized by the opposition for not presenting figures and studies to defend the Pension Reform today.
Due to this performance and the uncertainties that it generated, the dollar returned to increase by 0.54% and closed the day with the quotation of R$ 3.8790.
This change in the behavior of the Financial Market was a fruit of the defense of the Pension Reform, in the Chamber of Deputies, made by the Minister of Economy, Paulo Guedes.
The minister, who had already discussed harshly with Senator Kátia Abreu during his defense of the Pension Reform in the Brazilian Senate last week, was again criticized by the opposition for not presenting figures and studies to defend the Pension Reform today.
Due to this performance and the uncertainties that it generated, the dollar returned to increase by 0.54% and closed the day with the quotation of R$ 3.8790.
Brazil falls in ranking of WTO exporters
The annual report of the World Trade Organization (WTO) indicated that Brazil has fallen from 26th to 27th in the ranking of the world's largest exporters.
The report was released yesterday. According to the Ministry of Economy of Brazil, in 2018, Brazilian exports totaled US$ 239.523 billion. In 2017 this number was US$ 217.739 billion.
Brazil was overtaken by Vietnam, which became the 26th largest exporter on the planet.
In general, commodities continue to hold the balance of Brazilian exports. The leader of the WTO ranking in 2018 was China, followed by the United States (2nd place) and Germany (3rd place).
In 2018, Brazil also fell in the ranking of world competitiveness made by the World Economic Forum. The country was in 72nd position, behind nations like Armenia, Bulgaria, and Romania. In 2017, the Brazilian economy was the 69th most competitive in the world according to the same ranking.
The report was released yesterday. According to the Ministry of Economy of Brazil, in 2018, Brazilian exports totaled US$ 239.523 billion. In 2017 this number was US$ 217.739 billion.
Brazil was overtaken by Vietnam, which became the 26th largest exporter on the planet.
In general, commodities continue to hold the balance of Brazilian exports. The leader of the WTO ranking in 2018 was China, followed by the United States (2nd place) and Germany (3rd place).
In 2018, Brazil also fell in the ranking of world competitiveness made by the World Economic Forum. The country was in 72nd position, behind nations like Armenia, Bulgaria, and Romania. In 2017, the Brazilian economy was the 69th most competitive in the world according to the same ranking.
Tuesday, 2 April 2019
The surplus of the Brazilian trade balance falls in March
The surplus of the Brazilian trade balance dropped from US$ 6.24 billion in March 2017 to US$ 4.99 billion in March 2019. This is the worst result for the month of March since 2016.
This drop of 22.3% is linked to the crisis in Argentina, Brazil's main trading partner in South America and a major buyer of Brazilian manufactured goods.
Some of the Brazilian products hit hardest by the fall in March are cargo vehicles (68.2%), passenger cars (41.4%) and auto parts (31.4%).
The Brazilian surplus of March 2019 is a result of US $ 18.120 billion in exports and US$ 13.130 billion in imports.
The product most exported by Brazil in the period was raw cotton, which had a 123.6% increase in exports.
This drop of 22.3% is linked to the crisis in Argentina, Brazil's main trading partner in South America and a major buyer of Brazilian manufactured goods.
Some of the Brazilian products hit hardest by the fall in March are cargo vehicles (68.2%), passenger cars (41.4%) and auto parts (31.4%).
The Brazilian surplus of March 2019 is a result of US $ 18.120 billion in exports and US$ 13.130 billion in imports.
The product most exported by Brazil in the period was raw cotton, which had a 123.6% increase in exports.
Monday, 1 April 2019
The number of defaulted companies in Brazil grows
The number of companies in Brazil with debt increased by 5.02% in February 2019, compared to the same month last year.
The survey was carried out by the National Confederation of Shopkeepers (Confederação Nacional de Dirigentes Lojistas - CNDL) and the Credit Protection Service (Serviço de Proteção ao Crédito - SPC).
Banks and financial companies hold about 70% of the total debt. Therefore, this sector was the segment that most failed to receive from other companies.
Each indebted company has, on average, two accumulated financial arrears.
Default, without prior notice, reduces the ability to pay, directly affects cash flow, can cause losses for companies and can lead to bankruptcy.
This problem also affects the population. In 2018, more than 62 million Brazilians ended the year indebted. This represented an increase of 4.4% compared to 2017.
The survey was carried out by the National Confederation of Shopkeepers (Confederação Nacional de Dirigentes Lojistas - CNDL) and the Credit Protection Service (Serviço de Proteção ao Crédito - SPC).
Banks and financial companies hold about 70% of the total debt. Therefore, this sector was the segment that most failed to receive from other companies.
Each indebted company has, on average, two accumulated financial arrears.
Default, without prior notice, reduces the ability to pay, directly affects cash flow, can cause losses for companies and can lead to bankruptcy.
This problem also affects the population. In 2018, more than 62 million Brazilians ended the year indebted. This represented an increase of 4.4% compared to 2017.
Brazil's GDP growth to be the lowest in 120 years
A projection by the Instituto Brasileiro de Economia (Brazilian Institute of Economics) of the Fundação Getúlio Vargas (Ibre/FGV) indicates that the average growth of the Brazilian economy should be only 0.9% per year between 2011 and 2020. If everything continues as it is, will have its weakest performance in 120 years.
According to Ibre/FGV analysis, the weak performance of the economy reflects the successive deficits in public accounts since 2014 and two consecutive years of recession in 2015 and 2016.
This rate is lower than the 1.6% of the so-called 'lost decade' in the 1980s when the Brazilian government declared a moratorium and suspended the payment of international creditors.
In 2015 Brazil's GDP fell by 3.5%. By 2016, the fall in GDP was 3.3%.
According to the Ibre/FGV researcher, Marcel Balassiano, the country would have to grow around 5.7% in 2019 and 2020 for this decade also not be considered a lost decade.
Overall, Brazil's economic recovery has been slow, the industry is struggling to catch up, and the Brazilian state is headed for a few more years of fiscal deficits.
According to Ibre/FGV analysis, the weak performance of the economy reflects the successive deficits in public accounts since 2014 and two consecutive years of recession in 2015 and 2016.
This rate is lower than the 1.6% of the so-called 'lost decade' in the 1980s when the Brazilian government declared a moratorium and suspended the payment of international creditors.
In 2015 Brazil's GDP fell by 3.5%. By 2016, the fall in GDP was 3.3%.
According to the Ibre/FGV researcher, Marcel Balassiano, the country would have to grow around 5.7% in 2019 and 2020 for this decade also not be considered a lost decade.
Overall, Brazil's economic recovery has been slow, the industry is struggling to catch up, and the Brazilian state is headed for a few more years of fiscal deficits.
Sunday, 31 March 2019
Brazilian economy will only grow again in 2020, say businessmen
Brazil's business sector no longer believes that the country will grow again in 2019. According to José Carlos Martins, president of (CBIC (Brazilian Chamber of Construction Industry, in Portuguese, Câmara Brasileira da Indústria da Construção), the confrontations between the president of the Republic Jair Bolsonaro and the president of the Chamber of Deputies, Rodrigo Maia, are bad for the economy. According to Martins, "people take their foot off the accelerator, not to say they put their foot on the brake."
According to the Getúlio Vargas Foundation (FGV), the General Price Index - Market (IGP-M) increased 0.01% in January, a percentage higher than the one reached in December, when it varied -1.08%. As a result, the index accumulated a high of 6.74% in 12 months.
Meanwhile, the lack of capacity of Brazilian companies in the chemical sector, according to Fernando Figueiredo, chief executive of Abiquim (Brazilian Chemical Industry Association), stood at 23%. Simultaneously, the average idleness of Brazilian industry is 26%, according to FGV.
As the Brazilian economy continues to operate with a high level of idleness, the tendency is to maintain the high unemployment rate.
As the Brazilian economy continues to operate with a high rate of idleness, the tendency is the permanence of the high rate of unemployment in the country. Due to this environment of economic deceleration, the number of Brazilians without work reached a new record: 65 million people.
According to the Getúlio Vargas Foundation (FGV), the General Price Index - Market (IGP-M) increased 0.01% in January, a percentage higher than the one reached in December, when it varied -1.08%. As a result, the index accumulated a high of 6.74% in 12 months.
Meanwhile, the lack of capacity of Brazilian companies in the chemical sector, according to Fernando Figueiredo, chief executive of Abiquim (Brazilian Chemical Industry Association), stood at 23%. Simultaneously, the average idleness of Brazilian industry is 26%, according to FGV.
As the Brazilian economy continues to operate with a high level of idleness, the tendency is to maintain the high unemployment rate.
As the Brazilian economy continues to operate with a high rate of idleness, the tendency is the permanence of the high rate of unemployment in the country. Due to this environment of economic deceleration, the number of Brazilians without work reached a new record: 65 million people.
These 65 million are people of working age, but who are not working or looking for work. These are people who, after months of searching and frustration, give up looking for work.
Friday, 29 March 2019
Dollar reaches R$ 4.00 and scares Brazilian economists
A public discussion between the President of the Republic Jair Bolsonaro and the president of the Chamber of Deputies Rodrigo Maia made the financial market nervous this week.
Yesterday, March 28, the tourism dollar reached R$ 4.20 and euro at R$ 4.70. As a result, the day was turbulent in the Brazilian financial market.
Today, March 29, the commercial dollar opened the session with a fall of 0.84%, being traded at R $ 3.8830 for sale and R $ 3.8810 for purchase.
To make matters worse, unemployment continues high despite improvements in recent months. In the quarter ended in February, the unemployment rate in Brazil was 12.4%, according to data from the National Survey for Continuous Household Sample (Pesquisa Nacional por Amostra de Domicílios Contínua - PNAD) published today by the Brazilian Institute of Geography and Statistics (IBGE). In the same period in 2018, the unemployment rate measured by PNAD was 12.6%.
According to Eduardo Moreira (former partner of Banco Pactual), there is a fugue of investors from Brazil. For Moreira, a critic of the Bolsonaro administration, the first three months of government did not present any type of project and indicated a fragility in the president's capacity for articulation with the National Congress.
Yesterday, March 28, the tourism dollar reached R$ 4.20 and euro at R$ 4.70. As a result, the day was turbulent in the Brazilian financial market.
Today, March 29, the commercial dollar opened the session with a fall of 0.84%, being traded at R $ 3.8830 for sale and R $ 3.8810 for purchase.
To make matters worse, unemployment continues high despite improvements in recent months. In the quarter ended in February, the unemployment rate in Brazil was 12.4%, according to data from the National Survey for Continuous Household Sample (Pesquisa Nacional por Amostra de Domicílios Contínua - PNAD) published today by the Brazilian Institute of Geography and Statistics (IBGE). In the same period in 2018, the unemployment rate measured by PNAD was 12.6%.
According to Eduardo Moreira (former partner of Banco Pactual), there is a fugue of investors from Brazil. For Moreira, a critic of the Bolsonaro administration, the first three months of government did not present any type of project and indicated a fragility in the president's capacity for articulation with the National Congress.
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