Investments in Brazilian states plummet

According to Valor Econômico newspaper, state investments fell 64% compared to 4 years ago. According to fiscal reports of 23 federal units, investments fell from R$ 2.65 billion in the first two months of 2015 to R$ 934.8 million in the same period of 2019.

In the case of Rio de Janeiro, for example, investments totaled R$ 6.7 billion in 2015 for an expected investment of around R$ 300 million in 2019. This is a very evident example of the terrible economic situation of many Brazilian states. This degree of deterioration in state investments results from the high level of financial imbalance of the state accounts in the last five years.

The projections of economic growth, due to a crisis scenario very similar to last year, point down. Linking investments and business confidence to the approval of the Pension Reform can be a serious misconception since only the Pension Reform is not able to solve all the problems of the country.

There is an undeniable need for the federal government to present some short-term measures to try to minimize the crisis that affects the Brazilian economy.

Disapproval of the Bolsonaro government rises from 20% to 31%

Ipespe Research commissioned by XP Investimentos indicates that the disapproval of the current Brazilian government rose from 20% in January 2019 to 31% in May 2019.

In the same period, according to the same survey, government approval fell from 40% to 35%.

The current government operates under a dynamic of constant conflict, permanently creating enemies, even inside the government itself, and presenting few exits to the economic crisis in which the country finds itself.

The frustration of many voters is directly linked to the feeling that the current president is on a permanent election campaign. As macroeconomic indices such as unemployment, inflation, and industry performance present an increasingly difficult picture, voters want solutions and no longer debates on moral issues.

If the current government does not offer some sort of solution to the crisis affecting the country, the trend is the economic scenario that is bad enough to worsen further. This, in turn, will further weaken the current government.

Brazil: a desert of economic ideas

The current Brazilian economic scenario is catastrophic after years of low economic growth, fiscal uncontrol, and high unemployment rates. The whole contingency of the government that now hits hard federal universities and is sold by the government as a measure to try to cover the gap in the economy conceals, in fact, the lack of economic proposals of the current government for Brazil to leave the crisis frame in which is found.

The government uses the approval of the Pension Reform as the great measure capable of making Brazil grow again. The previous government, of president Michel Temer (who is back to jail in corruption probe), sold the labor reform in the same way. The then Minister of the Economy Henrique Meirelles went so far as to say that the reform would produce 6 million new jobs, but what actually occurred was the rise in unemployment.

Weak macroeconomic data are the result of the lack of proposals by the current government and the orthodox reforms adopted since the arrival of Joaquim Levy to the Brazilian Ministry of Economy during the second Dilma government in late 2014. Levy, now president of the BNDES, initiated a series of orthodox economic measures. Since there should be no Bolsonaro government spending increasing demand and Brazilian entrepreneurs do not seem willing to bet on the Brazilian economy, in the medium term the Brazilian economy should remain weak.

All indications are that in the coming months' recessive adjustments will continue amid the scrapping of Brazil's physical and social infrastructure.

Brazil: inflation higher than expected by the government

Inflation in Brazil continues to rise, reaching 4.94% per year and getting distance from the center of the official target for 2019, which is 4.25%.

According to the IBGE, the Broad National Consumer Price Index (IPCA), considered the country's official inflation, stood at 0.57% in April 2019. This is the highest rate for a month in April since 2016 when the index was 0.61%.

When it reached 4.94%, the accumulated in 12 months exceeded the central inflation target of 4.25% set by the National Monetary Council (CMN).

The rise in the price of medicines was one of the main reasons for the growth of inflation in Brazil. The upward trend in inflation in Brazil is expected to continue higher due to the 3.43% increase in the price of the gas cylinder, authorized by Petrobras and in effect since 5 of May, and also by the increase in the price of energy consumption.

Brazilian teachers announce general strike for May 15

Although the Social Security Reform begins to move in the National Congress, the policy of cuts in education spending adopted by the government of Jair Bolsonaro may take to the streets students who have overthrown the Dilma and Collor government.

The 2013 demonstrations that would eventually lead to the downfall of the Dilma government began with students protesting against a 20-cent increase in public transportation fares.

Now, with the policy of drastic cuts in the budget of the federal universities of the current government, everything indicates that the student movement can return to the streets. The first test will be on May 15 when teachers will make a general strike. If the movement gets the students' support, the Brazilian social situation may become even more chaotic.

Added to this scenario, the macroeconomic data for 2019 are very negative. There are analysts already indicating that the country may be heading into a new recession. Unemployment growth can also help to amplify the level of dissatisfaction in Brazilian society.

Justice orders former President of Brazil Michel Temer to return to prison

The Brazilian Justice today decided by two votes to one, that former President Michel Temer and Colonel João Baptista Lima Filho return to prison. The decision to revoke habeas corpus was judged by three judges of the Federal Regional Court of the 2nd Region. By 2 votes to 1, the court revoked the habeas corpus granted to Temer and João Baptista.

Temer had previously been arrested on March 21, 2019. He is accused of leading a criminal organization that received R$ 1 million corruption money over the construction contract for the Angra 3 nuclear power plant.

The former Brazilian president also responds for crimes of corruption, embezzlement and money laundering in the Lava Jato lawsuit that runs in Rio de Janeiro under the command of Judge Marcelo Bretas

São Paulo and Pará pull down Brazilian industry in March, according to IBGE

The drop of 11.3% in industrial production in Pará and 1.3% in the industry of São Paulo in March 2019 were the main influences for the result of -1.3% of the national industry. This is what the Regional Monthly Industrial Survey, published today by IBGE, shows.

Iron ore represents more than 80% of the industry of Pará, any oscillation in this sector affects drastically the industrial activity of that Brazilian state.

In São Paulo, the motor vehicle industry was the one that had the biggest reduction in its production. Part of this happened due to the rains of March that flooded the courtyards of the companies located in the region of the ABC of São Paulo, hindering the production. Another factor is the country's poor economic performance, which harms sales of cars.

As in Argentina, the Brazilian automotive industry is one of the most affected by the economic crisis affecting the region.

Datagro announces forecast of Brazilian soybean production for 2018/2019 lower than that of 2017/2018

Datagro has raised its soybean production estimate in Brazil in 2018/2019 to 115 million tons. The volume is 6% below the total of 122.3 million tons of the record harvest harvested in 2017/2018.

Datagro also forecasts productivity of 3,205 kilograms per hectare in this harvest, 8% below the 3,470 kg/ha of the 2017/2018 harvest.

Bolsonaro says that investing in Brazil is a very risky sport

According to Folha de S.Paulo newspaper, in a meeting with governors and the two presidents of the Legislature today, Brazilian President Jair Bolsonaro said investing in Brazil is a very risky sport. According to the Brazilian president, this is because of the bad economic situation facing the country.

This kind of statement helps the country very little. The chief executive should explain solutions to the economic crisis facing the country. Words produce concrete consequences as quoted by the chief executive.

The Brazilian president should be focused on national interests and presenting solutions. So far, the government indicates that the only way out of the crisis is to approve the Pension Reform. No other economic measure considered relevant, apart from the Pension Reform, was presented and defended by the current government.

Brazil leaves the list of A.T. Kearney of more reliable countries for foreign investment

The ranking of consultancy A.T. Kearney, which lists the 25 most reliable countries for investments, removed Brazil from this group of countries.

The list was created in 1998 and since its creation, Brazil was among the countries listed as more reliable for foreign investment.

The ranking is based on surveys of 500 executives from leading companies worldwide. Now, China, India, and Mexico are the only emerging countries in the ranking.

Petrobras profits down 42% in the first quarter of 2019

Petrobras closed the first quarter of 2019 with a profit of R$ 4 billion, 42% lower than the same period of 2018. The declines in oil and gas production coupled with interventionist actions by the government of Jair Bolsonaro were the main reasons for the performance lower than the first quarter of 2018.

The performance of the first quarter of 2019 again showed a mismatch between the projections made by economists and banks earlier this year and the economic reality of the country. For example, projections from six banks indicated early in 2019 that Petrobras would make a profit of around R $ 5.6 billion in the first quarter of 2019.

Many oil industry experts also point to Petrobras' worrisome high-debt expert, 3.1 times the company's cash generation. Currently, Petrobras' indebtedness stands at R$ 372.2 billion.

Petrobras said one of the main reasons for the drop in profit was the shutdowns in production for the maintenance of the platforms. According to the company, production is expected to return to normal in the coming months.