Tag Archives: Brazil

So for the correct view (yes, it was a coup) see Laura Carvalho here. As she says: The impeachment process of President Dilma Rousseff started as a retaliation by the speaker of Brazil’s lower house of Congress, Eduardo Cunha, indicted for taking as much as $40 million in a kickback scheme at the state-owned oil company Petrobras. Cunha, whose name is also tied to the Panama Papers, initiated the impeachment process shortly after a public announcement by government allies that they would...

Overall from 2003 to 2016 about 2.4%. If the last two years (2016 being an estimate are not counted) it's 3.5%. The collapse does not explain the impeachment (on this more later). It's more the result of the Workers' Party administration already caving and accepting the austerity policies promoted by the opposition.

By Felipe Rezende This is the first of a series of posts on the Brazilian crises. There are two major crises Brazil’s president Dilma Rousseff is facing: one is a political crisis and the other is Brazil’s sharpest recession in 25 years. Brazil’s Political Crisis The political crisis has two main pillars: a) a vast corruption scandal (with evidence of a kickback scheme funneling billions of dollars from state-run firms and, more recently, in a massive data leak over possible tax evasion,...

Tom Jobim said that Brazil was not for beginners, and he was right. The Brazilian economy is in free fall. As I noted before the causes are strictly internal, and not related to any fiscal problem. Inflation was low, even if closer to the top margin of the inflation target. Devaluation of the currency has led to higher inflation, on the low two digit level, just slightly above 10%. At the same time, fiscal contraction has led to a collapse of about 3.5% of GDP last year. There is little need...

New paper by Franklin Serrano and Luiz Eduardo Melin. From the abstract: Throughout the world, the reversion of fortune suffered by the Brazilian economy since reaching its zenith as recently as 2010 has confounded shrewd commentators, seasoned analysts and market players alike. As 2015 unfolded, ominous projections (“An Economy on the Brink”, “Brazil’s Economy Falters” “Worse May Be To Come”) were no less widespread than expressions of bewilderment (“Whatever Happened to Brazil”, “Brazilian...

Almost done for the year. So do not expect many posts before the end of the ASSA conference (January 5). But as I promised, here are some brief thoughts on the Brazilian crisis.Brazil is a mess. The economy is collapsing, with an estimated decline of about 3.5% in GDP this year (perhaps worse), and inflation has accelerated, to two digit levels, way above what used to be the upper limit of the inflation target band. Worse, politically the country is paralyzed, with an impeachment process in...

By Franklin SerranoA sharp slowdown in the Brazilian economy presents a critical challenge for the Workers’ Party (PT) government led by Dilma Rousseff. Between 2011 and 2014, economic growth averaged only 2.1 percent annually, compared with 4.4 percent in the 2004-2010 period.The recent downturn can be squarely blamed on economic policies implemented by Rousseff’s first administration (2010-14). This policy change sought to reduce the state’s role of directly promoting the expansion of...

By Felipe Rezende Introduction The creation of new sources of financing and funding are at the center of discussions to promote real capital development in Brazil. It has been suggested that access to capital markets and long-term investors are a possible solution to the dilemma faced by Brazil’s increasing financing requirements (such as infrastructure investment and mortgage lending needs) and the limited access to long-term funding in the country. Policy initiatives were implemented...

Reactions to S&P Downgrade: S&P analyst confirms there is no solvency issue By Felipe Rezende In previous posts (see here and here), I discussed Standard & Poor’s (S&P) downgrade of Brazil’s long-term foreign currency sovereign credit rating to junk status, that is, to ‘BB+’ from ‘BBB-‘ and its decision to downgrade Brazil’s local currency debt to a single notch above “junk” status. S&P hosted a conference call on Monday morning to explain its downgrade of Brazil’s...

So Brazil (or here about Petrobras, the State oil company) lost its investment grade status with Standard & Poor's. You would think this is huge given the media attention in Brazil. If you read S&P's actual rationale for the downgrading (here) it is essentially about the fiscal situation. They say: "We now expect the general government deficit to rise to an average of 8% of GDP in 2015 and 2016 before declining to 5.9% in 2017, versus 6.1% in 2014. We do not expect a primary fiscal...