Construction costs in Brazil grow 0.11% in May

The National Civil Construction Index (Sinapi), released today by IBGE, grew by 0.11% in May, a result below 0.34% in April. This is the lowest rate since November 2016, when it stood at 0.10%.

The share of labor research, with a decrease of 0.21%, influenced the national index.

Nationally, the average construction cost in May of 2019 was R$ 1,131.89, of which R$ 592.48 related to materials and R$ 539.41 to labor. Compared to April, labor fell by 0.21%, while materials rose by 0.39%.

Crisis in the Brazilian industry

According to the Annual Industrial Survey, published by IBGE, the Brazilian industry cut 1.1 million jobs between 2014 when the country officially went into recession, and 2017 – a decrease of 12.5%. The remaining vacancies had wages cut by 14.7%. In addition, Brazilian industry revenue fell 7.7% in the period. Between 2008 and 2017, the segments that lost most jobs were mining coal (-38.7%), manufacturing of petroleum products and biofuels (-32.9%) and manufacturing of wood products ( -22.4%).

The Brazilian industry suffers from the economic crisis that affects Argentina and the decrease in the rhythm of sales of products to the United States. These countries are big buyers of Brazilian industrial products: vehicles, engines, parts, machines, airplanes, according to analyst Vinicius Torres Freire.

Cost of living in Brazil: inflation slows down in May 2019

According to IBGE, official inflation in Brazil slowed down to 0.13% in May 2019. It is the lowest result for May since 2006 (when the index was 0.10%) and the lowest monthly index of the year. In 12 months, accumulated Extended Consumer Price Index (IPCA) declined to 4.66% but remains above the center of the target set by the government for 2019, which is 4.25%. The exchange rate returned below R$ 4.00 and economic growth is still stagnant. This leads many analysts to bet on an interest rate cut by the Brazilian Central Bank.

The fall in the index was influenced by the deflation of 0.56% in the price of food and beverages. On the other hand, raised housing prices, which rose 0.98%. Health and personal care were also villains in the month, up 0.59%. Fuel expenses also weighed more on Brazilian families' pockets in May. Gasoline, for example, increased 2.60% in the period.

Bovespa B3 opens higher today after the Ibovespa closed down yesterday

The main indicator of the São Paulo Stock Exchange, B3, opened higher today (06.Jun.2019), after having retreated more than 1% the day before. The recovery occurs because of the relatively benign scenario abroad.

Yesterday, Ibovespa had shown a fall due to new disagreements between the National Congress and the government of Jair Bolsonaro. The approval of the supplementary credit, aimed at allowing the government to continue to spend above the spending ceiling, was postponed again. This left the Brazilian financial market nervous and the reaction was a downturn on the Stock Exchange (Bovespa). Yesterday, the Ibovespa had a 1.75% drop, the highest since May 16, 2019.

Another factor that displeased the Brazilian financial market was the announcement of possible distancing of the current government from liberal policies. Yesterday, according to Bloomberg, the government of Jair Bolsonaro assumed that it could demand further flexibilization of the limit of public expenses after the ordeal of the Pension Reform. That would throw down the commitment of the minister Paulo Guedes's team to fiscal balance.

Brazil murder rate is one of the biggest in the world in absolute terms

Brazil had 65,600 murders in 2017, reveals Atlas of Violence by Ipea and the Brazilian Forum of Public Security. The survey considers records of the Mortality Information System, produced by the Ministry of Health.

The report warns of violence against youth, blacks, women and the LGBTI + population.

75% of homicide victims in Brazil in 2017 were black, according to the Atlas of Violence. Within a decade (from 2007 to 2017), the rate of blacks murdered rose by 33.1%. The murder was also the cause of half of the deaths of young people in Brazil in 2017.

This was the first time the Atlas of Violence included statistics on violence against the lesbian, gay, bisexual, transgender, transvestite and intersex population.

Another report produced by the Indian Missionary Council (CIMI) analyzed in 2018 data for the year 2017. The CIMI report also showed an increase in violence against indigenous peoples in Brazil. In cases of indigenous murder, the year 2017 registered 110 cases.

Brazil is also a country where there is a lot of violence against journalists. In 2018, the index increased by 36%, according to a report by the National Federation of Journalists (Fenaj). According to a survey, 227 journalists were verbally or physically attacked. 64 journalists were killed in their practice in Brazil between 1995 and 2018, according to a report by the Public Prosecutor's Office.

According to the magazine Superinteressante, Brazil has had more homicides than all of these countries in 2015: USA, Canada, Morocco, Algeria, Tunisia, Libya, Egypt, China, Mongolia, Malaysia, Indonesia, Australia, New Zealand, South Korea, Belgium, Netherlands, Luxembourg, Germany, Italy, Switzerland, Denmark, Norway, Sweden, Finland, Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Austria, Hungary, Belarus, Ukraine, Romania, Moldova, Bulgaria, Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Montenegro, Albania, Greece and Macedonia.

Caixa reduces interest rates in an attempt to rekindle the Brazilian real estate market

Caixa, the Brazilian state-owned bank and one of the five largest banks in the country, announced today (5.Jun.2019) the reduction of interest charged on real estate financing and the equalization of the rates practiced in the SFH (Housing Financial System) less than R$ 1.5 million – and in the SFI (Real Estate Financial System) – for higher value properties.

Now the two systems will practice rates ranging from 8.5% per year to 9.75% per year. Interest on the SFH (which also allows the use of FGTS funds) now ranges from 8.75% per year to 9.75% per year. In the SFI, they range from 9.75% to 11%.

For customers who do not have a direct relationship with the institution (counter), the maximum rate went from 11% per year to 9.75%.

The FGTS is an account intended for Brazilian workers. It's a cash reserve. Practically, a saving. The fund seeks to ensure the worker in difficult situations, such as dismissal without just cause and also in the acquisition of a property. The FGTS is a right guaranteed by the Brazilian Federal Constitution that every employer pay monthly.

The financial market in Brazil continues to believe in the economic team of the current government, even with the continuous negative results of the economy in 2019

Speaking at the Finance and Taxation Commission of the Chamber of Deputies, Brazil's economy minister, Paulo Guedes, defended the pension reform as the only way to reposition the country on the path of growth. The speech was viewed positively by the Brazilian financial market. Guedes said that it is necessary to disinfect the public machine and "slow down hiring" of more public servants.

The minister's speech was well received by the financial market, so much so that at the end of yesterday (04.jun.2019) the Stock Exchange (Bovespa) closed close to the high of the day. Therefore, Brazilian financial actors continue betting on the economic team of the current government, even after the continuous negative numbers of the economy.

As I have already written here, "the truth is that the Brazilian Financial Markets (analysts and economists) and the Brazilian businessmen bet very high on a government that was not able to respond to the height to that bet".

Many analysts and economists continue to make the same error of analysis and do not see or do not want to see the undeniable distance between the speech and the actual capacity of the current government to deliver reforms and public policies capable of taking Brazil out of the crisis.

Guedes again confuses some things. The creation of a digital government, where some services are being offered via the internet, does not necessarily mean hiring fewer public servants. When compared to other OECD countries, the level of public servants in Brazil is much lower than in most other countries. The country lacks, for example, the necessary number of doctors, teachers, and police to meet the basic needs of the country.

BTG Pactual, Brazil's largest investment bank, announces it will make an offer to sell 48 million units

BTG Pactual SA, Brazil's largest investment bank, announced today (05.Jun.2019) it will initially sell 48 million units as part of a secondary stock offering with restricted efforts. According to the note, the bank itself will be the lead coordinator, along with Morgan Stanley, Bradesco BBI, UBS, and Banco do Brasil.

BTG announced this decision after entering the retail force with its digital platform of investments and disputed this market in Brazil. In May, the bank announced the creation of a new business unit to play all its initiatives in this segment. This area will be led by Amos Genish, former president of Vivo and Telecom Italia.

Brazil: the plague of unemployment

In Brazil, the scourge of unemployment, for many people,  has been replaced by that of depression. More and more Brazilians are becoming mentally ill. Since 2017, according to WHO, Brazil has the highest rate of anxiety disorder in the world. The country also has a population depression rate among the highest five on the planet.

Atualmente, o Brasil está passando por crises de depressão e ansiedade. A população brasileira é a mais ansiosa e estressada da América Latina, segundo a Organização Mundial de Saúde. 9,3% da população brasileira sofre de transtornos de ansiedade.

In the current economic crisis that affects Brazil, this situation only worsens. Compared with the rest of the world, the Brazilian people are the ones who rely less on returning to work. According to a survey by consultancy Michael Page disclosed by the newspaper O Estado de São Paulo, 60% of Brazilians expect to return to the market in three months. This percentage is lower than Turkish, Portuguese and Italian workers, for example - the global average is 64%. As for salary increase, Brazil is also less confident: it ranked 21st among 37 countries, with 59% positive responses, and below the global average (61%).

This sentiment occurs even after the unemployment rate in Brazil fell to 12.5% in the quarter ended in April of 2019, according to data from the Brazilian Institute of Geography and Statistics (IBGE). This is a slight decrease compared to the rate of 12.7% recorded in the quarter ended in March.

The problem is that this drop is very small when we think about the universe of unemployed people in Brazil. Currently, unemployment still reaches 13.2 million people in the country. Despite the decline, the underutilized population - a group that brings together the unemployed, those who are underemployed (less than 40 hours a week worked), the discouraged (who gave up looking for work) and those who might be employed, but do not work for different reasons – reached 28.4 million, a record number of the historical series started in 2012.

Rodrigo Maia, the president of the Brazilian Chamber of Deputies, denies that he has made a political agreement with President Jair Bolsonaro

In an interview with the newspaper O Globo, Rodrigo Maia, the president of the Chamber of Deputies of Brazil, denies that he has made a political agreement with President Jair Bolsonaro. 

According to Maia, no pact was signed. Just a conversation. The president of the Chamber of Deputies also said that the current government does not have a formulated agenda. Meanwhile, Brazil would be headed for "social collapse".

Today, the deputy that is writing the report for the Pension Reform, Samuel Moreira (PSDB-SP), said that he seeks alongside Rodrigo Maia, "build a majority before submitting the report." Moreira said he should present his text until next Thursday.

To make matters worse, in the difficult economic scenario, Brazil suspended today meat exports to China after an isolated case of "mad cow". The suspension of trade, according to the Ministry of Agriculture, is provided for in the bilateral protocol signed by the two countries in 2015. Also according to the Ministry of Agriculture, the suspension is temporary until the Asian country completes the evaluation on health information already transmitted by Brazil about the episode.

Projection of the Brazilian GDP for 2019 reduces for the 14th consecutive week

According to the Focus Bulletin, a report produced by the Brazilian Central Bank, the Brazilian GDP growth estimate for 2019 was reduced for the 14th consecutive week. The new forecast, according to the report that refers to the projections made by financial institutions in Brazil, the GDP of 2019 should stand at 1.13%.

Four weeks ago, the expectation was 1.49% of GDP growth in Brazil. This is the lowest projection since January 2019.

According to economist and partner of the consultancy Tendências, Alessandra Ribeiro, "the numbers of the first quarter reinforced the picture of a weak economy" in Brazil.

The chief economist of Fator Bank, José Francisco de Lima Gonçalves, believes that the investment in Brasil "is performing poorly and I do not see how this can be reversed this year and next year."