Insolvency remains high among Brazilian consumers

Two years ago, Brazilian financial institutions were forced by the Central Bank of the country to reduce the time that left consumers rolling the debt on the credit card. This measure aimed to reduce the level of default among Brazilian consumers.

When this measure was announced by the Brazilian Central Bank, credit card interest in Brazil had the highest cost of the world financial system. The average rate has dropped from an unbelievable range of 500% a year to the current 300%, which is still very high.

Entering this type of debt is a clear indication that the Brazilian consumer still faces many difficulties in paying its debts. The level of defaults in the country in 2019 follows around 35%.

To make matters worse, in 2019, defaults by micro and small companies in Brazil reached a record high. The number of defaulters reached 5.3 million in March 2019, according to Serasa Experian.

According to the International Monetary Fund (IMF), the already slow economic recovery in Brazil is at risk

The International Monetary Fund (IMF) has warned this week of the risks posed by domestic and external shocks to the Brazilian economy. According to the IMF, these shocks can hinder the already slow recovery of the Brazilian economy.

According to the IMF, investments in Brazil "remains subdued, retained by idle capacity and persistent uncertainty about the prospects for fiscal and structural reforms. Weak global growth and recession in Argentina are affecting exports. The growth in 2019 is projected between 1% and 1.5%, with significant risks of decline."

For the IMF, the main risk related to the Brazilian economy is associated with the approval of a Pension Reform that generates a "robust" economy to the public coffers in the long term.

Brazilian company Natura buys Avon Products

Natura, the Brazilian cosmetics manufacturer, sent a statement to the market confirming the purchase of US competitor Avon Products. The business had been speculated a few weeks ago by the market. The operation creates, according to the statement of Natura, "the fourth largest exclusive beauty group in the world". An agreement will be made to exchange shares between the two companies: while Natura will control about 76% of the combined group, the rest will be held by Avon shareholders. Taking into account the values of the closing of the shares the day before, the group is valued at US$ 11 billion (about R$ 44.5 billion).

Now along with Avon, Natura must have annual revenues of over US$ 10 billion and more than 40,000 employees worldwide. 

In recent years Natura has adopted an aggressive policy of expansion. In 2013, the Brazilian company bought Australia's Emeis Holdings, a manufacturer of premium beauty products, which operates under the Aesop brand. In June 2017, Natura announced the purchase of 100% of the Body Shop, which belonged to the French L'Oreal, in operation of about 1 billion euros.

The B3, the main indicator of the Bovespa, falls after Brazilian Economy Minister Paulo Guedes threatens to resign

Today, May 24, 2019, the Bovespa Index had its third consecutive day of low. B3's main share index rose more than 1% in the morning, but lost its force in the afternoon and closed 0.30% lower at 93,627.80 points.

This fall occurred after VEJA magazine published an exclusive interview in which the Economy Minister, Paulo Guedes, said he would resign if reform proposal becomes just a "little Pension Reform".

In the week, however, the Brazilian stock market was up 4.04%.

The dollar, on the other hand, closed today at R$ 4.0152, the lowest price in 10 days. The Brazilian Real was the emerging currency that strengthened the most on Friday in relation to the US currency.

One-fifth of Brazilian families use coal to cook food because of pricing policy for household gas of Petrobras

According to a survey published by the IBGE (Pnad Contínua), the impoverishment of the population produced by the prolonged economic crisis combined with rising unemployment and the price of LPG (Liquefied petroleum gas) cylinder led one-fifth of Brazilian families to use firewood or charcoal for cooking. Today, 14 million households prepare food in this way, an increase of 27 percent or three million homes between 2016 and 2018. In the Southeast fo Brazil, growth was 60 percent.

Meanwhile, Petrobras maintains a more expensive price for cooking gas than the one practiced internally since 2018 to recover losses that the company has had in recent years. It is a monopoly that harms the Brazilian people for the benefit of foreign and Brazilian investors.

Unfortunately, this pricing policy of Petrobras is driving the poorest classes in Brazil to return to using firewood to make food. A return to the Middle Ages. It is a country where the "modernity" of the "market prices" practiced by Petrobras forces the use of firewood and coal.

In Brazil, the readjustments in the price of LPG (liquefied petroleum gas) practiced by Petrobras are quarterly and consider international price averages and the exchange rate in previous quarters. It is this policy that led thousands of Brazilians to cook between soot and smoke.

Brazilian consumer confidence index retreats for the 4th consecutive month

Getulio Vargas Foundation (FGV) released today that the Brazilian consumer confidence index declined 2.9 points in May compared to April, from 89.5 to 86.6 points.

This is the lowest level of the index from October 2018, when it stood at 85.4 points. Currently, the consumer confidence index accumulates a loss of 10 points in 4 months.

According to Viviane Seda Bittencourt, "the result of May 2019 shows a significant increase in consumer dissatisfaction with the current situation, especially among families with lower purchasing power. A change in this situation seems to be conditional on the reduction of the high levels of political and economic uncertainty observed in the country today. "

US Dollar continues high in Brazil

The rise in the dollar increases the cost of living in Brazil. Many products sold in Brazil have their prices linked to the US dollar quotation. Drugs and fuel prices are deeply affected by the dollar's price in Brazil.

Foreign capital flows are very important for Brazil. However, the slow pace of Pension Reform in the National Congress drives international investors to become more pessimistic about making new investments in Brazil.

Since May 16, the price of the US dollar in Brazil has exceeded R$ 4.00 and remained above this level. Today, the dollar is up in the Brazilian financial market.

Many analysts are saying that it will only return to a lower level if there is an improvement in the climate abroad, with a possible understanding between China and the United States, or if there is greater confidence in the approval of the Pension Reform in Brazil.

Brazilian legislature approves tax reform without the help of Jair Bolsonaro's government

Without the help of the government of President Jair Bolsonaro, the Constitution and Justice Commission of the Chamber (CCJ) of Deputies approved the admissibility of the tax reform. 

The proposal provides for the replacement of five taxes by one, the IBS, within ten years. The objective is to simplify and make more transparent the collection of taxes.

The text, authored by deputy Baleia Rossi (MDB-SP) and the economist Bernard Appy, director of the Center for Fiscal Citizenship (CCIF), goes to the special committee without any help from the government, that now is seen as an impediment to the adoption of reforms.

The Chamber of Deputies, therefore, decided to carry out its own economic agenda without any articulation by the government of Jair Bolsonaro. 

On the day Congress began to vote on a proposal for tax reform, the Federal Revenue Secretary of the current government, Marcos Cintra, declined an invitation to discuss the issue in the Chamber of Deputies. Thus, the only government representative in the area decided would not participate in the debate and approval of the reform made today in the CCJ.

After approval of the text in the CCJ, Cintra said that the government will support tax reform approved today. Cintra's speech was seen as paradoxical.

Brazilian public banks will have to return to the public coffers around R$ 20 billion in 2019

According to a report published today (January 22, 2019) by the newspaper Valor Econômico, Brazilian public banks will have to return to the Union at least R$ 20 billion in 2019.

Public banks that must return money to the public coffers are Caixa Econômica, Banco do Brasil, BNDES, Banco do Nordeste and Banco da Amazônia.

The funds are part of R$ 86 billion in loans that the institutions received from the federal government as a capital increase during the management of Dilma Rousseff (2011-2016).

According to the publication, the money returned will be used to crush the public debt. In 2019, the government is allowed to stay in the red by up to R$ 139 billion.

Brazilian government announces thousands of state layoffs

In the midst of one of the biggest crises in the history of the Brazilian labor market, the current government announced a severe cut of personnel in Brazilian state-owned companies. The measure is expected to reach more than 25,000 employees by the end of 2019, according to data from the companies and the Ministry of Economy compiled by the "G1" website.

The federal government has already approved seven programs of voluntary dismissal or incentive retirement in companies such as Correios and Embrapa. The official projection is that the downsizing will bring savings of about $ 2.3 billion annually to public coffers.

In the short term, reducing public service employment, particularly during the current time of severe financial crisis, adds workers directly to the Brazilian unemployment lists. It is a measure that reduces consumption and further affects the economy, amplifying the effects of a possible return to recession.

Currently, unemployment reaches 13.4 million Brazilians. Of these, 3 million have been for 2 years or more without formal employment.

Income inequality in Brazil is the highest in seven years

According to a survey by the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre/FGV) released today, income inequality reached the highest level in seven years. The Gini index, which stood at 0.627 in the first quarter of 2019, is the highest since the first quarter of 2012, the beginning of the historical series when the number was 0.608. According to the Gini index, when the closest to 1 more unequal is the country.

The main reasons are the upward unemployment rate, hitting 12.7% in the first quarter of 2019, and the prolonged effects of the recession that began in 2014.

The projected GDP growth in 2019, which is around 1% according to several analysts, will not change this picture. Therefore, the picture of inequality must remain in Brazil at least until 2020.