|
 Specialists in Brazil's financial market have started believing in better results in the economy and have made some corrections to their previous forecasts. According to the Focus Bulletin, disclosed today, May 28, by the Brazilian Central Bank (BC), the average expectation of hundreds of market analysts heard last Friday, May 25, is that Brazilian industrial production should grow 4.19% this year, and not 4.07% as forecasted in the previous week.
They also corrected their forecasts for Gross Domestic Product (GDP) growth, which is the total of production in the country, and estimated that it will grow 4.16% in the year, against a forecast of 4.10% in the previous research.
The expectation of analysts was also revised up with regard to the trade balance surplus. The forecast last week had been for a trade balance surplus of US$ 41.10 billion in the year, and was altered up to US$ 42 billion.
The BC study maintained its expectations of US$ 20 billion in foreign direct investment (FDI) in the productive sector. The analysts also forecast that the benchmark interest rate (Selic), currently at 12.50% a year, will drop to 12% at the next Monetary Policy Committee (Copom) meeting, to take place next week (June 5 and 6), and may reach 10.75% this year, dropping to 10% next year.
On February 28 it was announced that the Brazilian foreign trade reserves had exceeded the US$ 100 billion barrier for the first time in history. The news was given by the Brazilian Central Bank (BC), which disclosed that foreign currency reserves - a kind of savings account that the country has for possible economic shocks - reached US$ 100.3 billion.
Finance minister Guido Mantega commemorated the fact stating that it "makes the country more resistant to the foreign turbulence that occasionally materializes." And the minister recalled that the financial market is nowadays "powerful and boosted", and that Brazil has large reserves to be able to face the situation if there is a large outflow of investment. "With the reserves, we will be vaccinated against international turbulence," he guaranteed.
International reserves are composed of dollars entering the country due to exports and to financial investment and also due to purchases of the dollars made by the BC. To purchase the dollars, the BC sells treasury bonds corrected by the Brazilian benchmark interest rate, the Selic, currently at 13%.
When the organization invests the dollars abroad, the remuneration is approximately 5%. The cost to the country of the purchase in dollars is 8%, and therefore analysts criticize the reserve replenishing policy that the BC put in place in 2004.
Mantega stated that it is due to the security that Brazil is immune to turbulence that countries now loan money to the country at lower interest rates. "The security we currently have that turbulence does not affect us is worth gold."
 |
Subscribe to this comment's feed
The small, coastal town of Condé is located just a twenty minute's drive from João Pessoa, the capital of Paraíba. The Northeast of Brazil has historically been a place of encounter and mixing between peoples. For millenia groups of indigenous people fished, farmed, migrated and sometimes fought along this large, fertile area. 
The Brazilian diplo-MÁ-cia (bad diplomacy) carries on its accelerated course towards the non-acknowledgment of human rights, although sometimes it takes pleasure in saying that it does precisely the opposite. The visit of Iran's president, Mahmoud Ahmadinejad, is another example of a diplomatic omission that verges on hypocrisy. 
On July 4, 2006, representatives of Argentina, Brazil, Paraguay and Uruguay met in Caracas to sign the protocol for the entrance of Venezuela into the Southern Common Market (Mercosur). After two and a half years, the protocol was approved by the legislative bodies of Argentina and Uruguay, and as of now it may be only days away from being ratified by the continent's economic megalith, Brazil. 
Some sectors of the fight against AIDS have suggested that Thabo Mbeki, the former president of South Africa, committed genocide through his absence from the fight against the illness in his country throughout his two terms. 
One hundred and eleven years after Brazil abolished slavery, the number of workers deprived of their freedom is still huge. They raise cattle, produce charcoal, sugar cane or timber. Some of them, most undocumented Bolivians, work in basements of small apparel factories in São Paulo and other metropolis. 
On November 7, 2009 a few friends and I had an opportunity to take a look inside a Brazilian jail outside the city of Rio de Janeiro. We were able to take some amateur footage of our experience on video (see link below). It's no surprise, of course, that the typical Brazilian jail lacks some of the functionality of those in North America or Europe, but our experience that day was quite shocking. 
Depletion of the Amazon Rainforest is not a new concern facing environmentalists, biologists, ecologists, and a growing number of the Amazonian indigenous peoples. For decades they have feared for the fate of the world's most biologically diverse and species-rich hothouse. 
Geisy Arruda made history this week in Brazil, but for all the wrong reasons. What began as a poorly planned fashion statement has become a worldwide tale. Geisy decided to wear a pink mini-dress to her private college in São Paulo state, and after that, all hell broke loose. 
The push of vigilante groups in Rio de Janeiro's favelas (shantytowns) in the last three years is the most important and alarming information of the just-released study by the Rio de Janeiro University's Violence Research Center (Nupev-Uerj). 
A dispute over drug trafficking territory in Rio de Janeiro has intensified lately, leaving in its wake unprecedented acts of violence, such as the downing of a police helicopter in the northern zone of the city on October 17. Three policemen died and another two were injured. This event has drawn the attention of the international media, who are raising the issue of public security for the 2016 Olympics to be held in Rio.
By some measures Brazil is already an investment grade economy. Standard & Poor's yesterday raised its local currency sovereign rating by two notches to investment grade, although the foreign currency rating matters more to analysts and investors.
Fitch's "country ceiling" - the general upper limit on ratings for non-government issuers - is also at investment grade.
Several private issuers, mostly big industrial groups and banks, already have investment grade ratings, some even higher than Fitch's country ceiling. There is little mystery about what has driven the recent upgrades.
Brazil's macroeconomic "fundamentals" - its trade balance and balance of payments, inflation, the profile of public debt - have all improved steadily in recent years. This year alone Brazil has accumulated more than $35bn in foreign reserves bringing the total to more than $120b