The Tax on Circulation of Goods and Services (ICMS) will not be charged to farmers by the Brazilian state governments. The measure will help contain the rise in food prices, but it will also cost about R$40 billion reais to the public safes.
The problem is that many state governments are broken. The worst cases are Rio de Janeiro, the Rio Grande do Sul, Minas Gerais, Roraima, Rio Grande do Norte, and Mato Grosso, which have already declared a state of public calamity in the financial sphere.
Therefore, on the one hand, the measure that helps farmers and secure food prices in the short term will make even worse the financial situation of states facing a calamity situation in the public accounts in the long run.
Monday, 15 April 2019
Friday, 12 April 2019
Bolsonaro's government decides to interfere in fuel prices
Petrobras had announced that the average liter value of the fuel would rise 5.74% from today. However, the government of President Jair Bolsonaro, who until then claimed to be liberal in the economy, prohibited that the increase was applied.
The government fears a new strike by truck drivers like the one that stopped the country in 2018.
According to analysts, this measure hinders the work of reduction of debt and sale of assets made by Petrobras in recent years. The interference, very similar to the one made by the Dilma Rousseff government, can greatly harm the health of Petrobras. Petrobras' stock prices are expected to reflect this interference negatively. This should also drive the performance of the financial market in Brazil today and in the coming days.
In addition, the government also waved at the possibility of creating a tax on all financial transactions in Brazil. This should also be not welcomed with many criticisms of the Brazilian financial market.
The promise to reduce taxes made during the campaign of Jair Bolsonaro to the presidency generated many expectations in the Brazilian financial market. If the new tax is presented by the current government, the tendency is for the Brazilian financial market to take a more critical stance on the government.
The government fears a new strike by truck drivers like the one that stopped the country in 2018.
According to analysts, this measure hinders the work of reduction of debt and sale of assets made by Petrobras in recent years. The interference, very similar to the one made by the Dilma Rousseff government, can greatly harm the health of Petrobras. Petrobras' stock prices are expected to reflect this interference negatively. This should also drive the performance of the financial market in Brazil today and in the coming days.
In addition, the government also waved at the possibility of creating a tax on all financial transactions in Brazil. This should also be not welcomed with many criticisms of the Brazilian financial market.
The promise to reduce taxes made during the campaign of Jair Bolsonaro to the presidency generated many expectations in the Brazilian financial market. If the new tax is presented by the current government, the tendency is for the Brazilian financial market to take a more critical stance on the government.
Brazilian banks have the highest profit in history
Profits of Brazilian banks grew by 17.40% between 2017 and 2018. This was pointed out by the Brazil Central Bank's Director of Inspection, Paulo Souza. According to him, the net profit recorded by banks in Brazil at the end of 2018 was R$ 98.5 billion.
According to the banks, the factors that contributed to this result are the reduction of defaults and administrative expenses. The profits of the country's four largest banks (Banco do Brasil, Bradesco, Itaú Unibanco, and Santander) were R$ 69 billion in 2018. This represents a 20% increase compared to 2017.
This exceptional performance contrasts with a country where the majority faces a framework 63 million people unable to clear their names and regain their credit, where 13 million are unemployed and more than 30 million work in informality.
It is very difficult to understand how a country with stagnant economic performance, industry hitting negative records, falling per capita income, rising poverty levels may have a sector with so much profitability.
For some economists, these results are a direct result of the banking oligopoly that exists today in Brazil. This oligopoly guarantees extravagant profits. If Brazil had a more competitive banking system, the fees charged by banks would be lower, the services would be better and profits would not be so exorbitant.
According to economist Eduardo Moreira, the five largest single-rate banks charge more than R$ 130 billion of their clients every year. To get an idea of the size of this amount, the entire health budget in Brazil is R$ 120 billion per year. For him, the banks' performance is a machine of the concentration of wealth and abusive collections of interest and taxes on the middle class and the poor Brazilians.
According to the banks, the factors that contributed to this result are the reduction of defaults and administrative expenses. The profits of the country's four largest banks (Banco do Brasil, Bradesco, Itaú Unibanco, and Santander) were R$ 69 billion in 2018. This represents a 20% increase compared to 2017.
This exceptional performance contrasts with a country where the majority faces a framework 63 million people unable to clear their names and regain their credit, where 13 million are unemployed and more than 30 million work in informality.
It is very difficult to understand how a country with stagnant economic performance, industry hitting negative records, falling per capita income, rising poverty levels may have a sector with so much profitability.
For some economists, these results are a direct result of the banking oligopoly that exists today in Brazil. This oligopoly guarantees extravagant profits. If Brazil had a more competitive banking system, the fees charged by banks would be lower, the services would be better and profits would not be so exorbitant.
According to economist Eduardo Moreira, the five largest single-rate banks charge more than R$ 130 billion of their clients every year. To get an idea of the size of this amount, the entire health budget in Brazil is R$ 120 billion per year. For him, the banks' performance is a machine of the concentration of wealth and abusive collections of interest and taxes on the middle class and the poor Brazilians.
Thursday, 11 April 2019
Articulation of the Brazilian government will determine the behavior of the Brazilian financial market in the coming days
The first three months of the government still produces some optimism among some agents of the Brazilian financial market.
The lull in the international financial market, with Central Banks acting and China and US relation showing a more positive picture, helps maintain a certain optimism among Brazilian investors.
The Brazilian government began to move more to approve the Pension Reform. However, the government has not yet been able to consolidate an allied base for approval of its projects.
It all depends on the Brazilian government's ability to do politics. However, it appears that there is no such bargaining power in government.
There is also the danger that Bolsonaro or his sons may again publicly quarrel with some important political actor, as happened weeks ago the quarrel between the President of the Republic, Jair Bolsonaro, and the president of the Brazilian National Congress, Rodrigo Maia.
The lull in the international financial market, with Central Banks acting and China and US relation showing a more positive picture, helps maintain a certain optimism among Brazilian investors.
The Brazilian government began to move more to approve the Pension Reform. However, the government has not yet been able to consolidate an allied base for approval of its projects.
It all depends on the Brazilian government's ability to do politics. However, it appears that there is no such bargaining power in government.
There is also the danger that Bolsonaro or his sons may again publicly quarrel with some important political actor, as happened weeks ago the quarrel between the President of the Republic, Jair Bolsonaro, and the president of the Brazilian National Congress, Rodrigo Maia.
Cost of living in Brazil: inflation accelerates
Brazil's Broad Consumer Price Index (IPCA) rose from 0.43% to 0.75% between February and March 2019, according to IBGE data. This is the 4th consecutive high of inflation and the highest index for March since 2015.
Therefore, the IPCA closed the month of March with a rise of 0.75%, which is above the top of the market estimates, which were between 0.50% and 0.70%.
As a result, the IPCA accumulated in 12 months jumps from 3.89% (well below the target of 4.25% to 4.58% (well above the target)
The item that had the highest growth was gasoline, which rose 2.99% and accounted for 0.12 percentage points of the inflation indicator.
Tomato and bean prices were the highest among food items. The tomato increased by 31.84% in the monthly comparison. Beans racked up 105 percent of the growth in its prices in the first quarter.
Therefore, the IPCA closed the month of March with a rise of 0.75%, which is above the top of the market estimates, which were between 0.50% and 0.70%.
As a result, the IPCA accumulated in 12 months jumps from 3.89% (well below the target of 4.25% to 4.58% (well above the target)
Tomato and bean prices were the highest among food items. The tomato increased by 31.84% in the monthly comparison. Beans racked up 105 percent of the growth in its prices in the first quarter.
Wednesday, 10 April 2019
Paulo Guedes, Brazil's Economy Minister, promises to halve the price of gas
During a meeting of mayors nationwide, held yesterday in Brasilia, the Brazilian capital, Economy Minister Paulo Guedes promised that the current government will implement a plan called "cheap energy shock." According to him, by ending Petrobras' monopoly in this sector and encouraging competition, the price of gas will be halved.
At the same meeting, Guedes said he will reduce the number of taxes in the country and create a Single Federal Tax.
According to the National Union of Liquefied Petroleum Gas Distributors (Sindigas), six companies account for almost 90% of the distribution market in Brazil. In the previous management of Petrobras, during the Michel Temer government, the sale of 90% of the shares of Nova Transportadora do Sudeste (NTS) and the sale of 49% of the subsidiary Gaspetro was completed.
Currently, Petrobras is responsible as a concessionaire for 75% of the gas produced and for 96% as an operator.
Brazil currently consumes about 100 million cubic meters of natural gas per day, only 4% of households in the country use piped gas. The other 96% is divided between wood stoves, gas canisters and other alternatives.
At the same meeting, Guedes said he will reduce the number of taxes in the country and create a Single Federal Tax.
According to the National Union of Liquefied Petroleum Gas Distributors (Sindigas), six companies account for almost 90% of the distribution market in Brazil. In the previous management of Petrobras, during the Michel Temer government, the sale of 90% of the shares of Nova Transportadora do Sudeste (NTS) and the sale of 49% of the subsidiary Gaspetro was completed.
Currently, Petrobras is responsible as a concessionaire for 75% of the gas produced and for 96% as an operator.
Brazil currently consumes about 100 million cubic meters of natural gas per day, only 4% of households in the country use piped gas. The other 96% is divided between wood stoves, gas canisters and other alternatives.
Brazilian Stock Exchange (Bovespa) have the largest fall of the last two weeks
The Ibovespa, index that measures the price variation of the main shares traded on the Bovespa dropped 1.11% yesterday, April 3, 2019. The market saw with pessimism the statement of Economy Minister Paulo Guedes, who said that he will not assume the position of articulator of the Pension Reform in the Brazilian National Congress.
Also yesterday, the IMF reduced Brazil's GDP forecast in 2019. According to the IMF's World Economic Outlook report, Brazil's GDP growth forecast is now 2.1% in 2019. The forecast made in January 2019 by the same IMF was that the Brazilian GDP would grow around 2.5% this year.
In the Bolsonaro administration, there is no economic development plan for the country. Economy Minister Paulo Guedes believes growth will only come after the approval of the Pension Reform. However, several Brazilian economists like Nelson Marconi and Paulo Feldmann believe that the government should adopt other measures, in addition to the Pension Reform, to combat unemployment in the country.
The same IMF report pointed out that Venezuela's GDP fell by 18% in 2018 and should fall 25% in 2019. As a result of these declines, Venezuela's economy in 2020 will be almost half of what it was in 2017.
The inflation forecast by the IMF for Argentina in 2019 is 43.7%. Because of this, the IMF decided to release a US $ 10.8 billion pass-through to the Macri government, which was unable to resolve the economic crisis and faced a decline in its popularity. Over the past six months, some 2.7 million Argentines fell under the category of poor and destitute. In total, there are already 12.9 million poor and indigent people in the country with just over 44 million inhabitants.
In the Bolsonaro administration, there is no economic development plan for the country. Economy Minister Paulo Guedes believes growth will only come after the approval of the Pension Reform. However, several Brazilian economists like Nelson Marconi and Paulo Feldmann believe that the government should adopt other measures, in addition to the Pension Reform, to combat unemployment in the country.
The same IMF report pointed out that Venezuela's GDP fell by 18% in 2018 and should fall 25% in 2019. As a result of these declines, Venezuela's economy in 2020 will be almost half of what it was in 2017.
The inflation forecast by the IMF for Argentina in 2019 is 43.7%. Because of this, the IMF decided to release a US $ 10.8 billion pass-through to the Macri government, which was unable to resolve the economic crisis and faced a decline in its popularity. Over the past six months, some 2.7 million Argentines fell under the category of poor and destitute. In total, there are already 12.9 million poor and indigent people in the country with just over 44 million inhabitants.
Tuesday, 9 April 2019
Projection of the Brazilian GDP falls for the 6th consecutive time
According to the Focus bulletin published by the Brazilian Central Bank, for the 6th consecutive week, a survey conducted by the institution with market analysts consulted reduced the growth projection of the Brazilian economy. According to the Focus bulletin, the country's Gross Domestic Product (GDP) is expected to advance 1.97% in 2019.
However, there are analysts in Brazil working with estimates below that number, around 1.5%. The slow pace of economic recovery and instability in the political environment have led to declining expectations.
Due to these prognoses, the Government of Brazil announced the blocking of R $ 29.79 billion in this year's Budget. One of the most significant decreases was in the area of Agriculture. The growth projection fell from 2% to 1%. For the industry sector, the expectation of growth for the year 2019 went from 2.9% to 1.8%.
However, there are analysts in Brazil working with estimates below that number, around 1.5%. The slow pace of economic recovery and instability in the political environment have led to declining expectations.
Due to these prognoses, the Government of Brazil announced the blocking of R $ 29.79 billion in this year's Budget. One of the most significant decreases was in the area of Agriculture. The growth projection fell from 2% to 1%. For the industry sector, the expectation of growth for the year 2019 went from 2.9% to 1.8%.
Monday, 8 April 2019
Abraham Weintraub is the new Minister of Education of Brazil
After numerous confusions and the complete paralysis of the Ministry of Education, President Jair Bolsonaro fired the Minister of Education Ricardo Vélez.
The dismissal of Vélez Rodríguez is the second drop in the government ministry Jair Bolsonaro in less than 100 days of this administration. Secretary-General Gustavo Bebianno was fired after a controversy with Bolsonaro's son, Carlos.
The new Minister of Education, Abraham Weintraub is an economist and has worked in the financial market for more than 20 years.
The confusion was so great that in the last 3 months, at least 12 people in important positions left the Ministry of Education. Some of them had not even been replaced, leaving important areas of Brazilian education completely destitute and without command. In 2019, the Ministry of Education will administer a total of R$ 122 billion.
The dismissal of Vélez Rodríguez is the second drop in the government ministry Jair Bolsonaro in less than 100 days of this administration. Secretary-General Gustavo Bebianno was fired after a controversy with Bolsonaro's son, Carlos.
The new Minister of Education, Abraham Weintraub is an economist and has worked in the financial market for more than 20 years.
The confusion was so great that in the last 3 months, at least 12 people in important positions left the Ministry of Education. Some of them had not even been replaced, leaving important areas of Brazilian education completely destitute and without command. In 2019, the Ministry of Education will administer a total of R$ 122 billion.
Decreases optimism with the Brazilian economy after 100 days of Bolsonaro's government
A Datafolha survey, released today (May 8, 2019), indicates that the Brazilian population optimism about the economy fell from 65% in December 2018 to 50% in April 2019.
Because of this, the financial market begins opens a quieter week in Brazil after the beginning of a larger dialogue between President Jair Bolsonaro and the National Congress.
Until now, the first 100 days of the Bolsonaro administration were a major mess. This picture spread to the financial market, which initially had a very positive expectation of the new government.
Several investors reviewed their positions and the Stock Exchange saw the dollar reach the price of $ 4.00 last week.
This week, the financial market and risky assets start in much less optimistic expectation. There is much more caution today for buying, for example, the kit Brazil.
Because of this, the financial market begins opens a quieter week in Brazil after the beginning of a larger dialogue between President Jair Bolsonaro and the National Congress.
Until now, the first 100 days of the Bolsonaro administration were a major mess. This picture spread to the financial market, which initially had a very positive expectation of the new government.
Several investors reviewed their positions and the Stock Exchange saw the dollar reach the price of $ 4.00 last week.
This week, the financial market and risky assets start in much less optimistic expectation. There is much more caution today for buying, for example, the kit Brazil.
The number of indebted and defaulting Brazilian families grows
According to a survey conducted by Brazil's National Confederation of Trade in Goods, Services, and Tourism (CNC), the number of indebted Brazilian families rose from 61.5% to 62.4% between February and March 2019. In the same period, the number of default of families grew from 23.1% to 23.4%. This is the highest level since 2015 according to the CNC.
The credit card was the main source of debt for 78.0% of indebted households, followed by bills (14.4%) and car financing (10.0%).
In Brazil, the interest rate charged by the credit card is among one of the highest in the world. In February of 2019, according to the Central Bank of Brazil, the revolving credit card interest stood at 295.5% per year.
The credit card was the main source of debt for 78.0% of indebted households, followed by bills (14.4%) and car financing (10.0%).
In Brazil, the interest rate charged by the credit card is among one of the highest in the world. In February of 2019, according to the Central Bank of Brazil, the revolving credit card interest stood at 295.5% per year.
Subscribe to:
Posts (Atom)