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POLITICS

The number of poor recognized in records by the government would rise from zero to at least 22.3 million if the income officially used to define poverty were corrected for inflation, Folha reported. This number corresponds to more than 10% of the Brazilian population, another fact undermining the story of Brazil’s new middle class. READ THIS.

Brazil’s government needs to worry less about its high approval ratings and focus instead on reforms that, while unpopular, could bring the country out of its recent rut of subpar growth, former President Fernando Henrique Cardoso said. Speaking at the Reuters Latin America Investment Summit, Cardoso blamed politicians’ “excessive confidence” in the status quo for economic growth that averaged just 1.8 percent over the last two years, a period that saw Brazil fall out of favor as a hot spot for foreign capital (Reuters).

Brazil’s government has frozen 28 billion reais ($13.7 billion) in its 2013 budget as it tries to meet its primary surplus target, Finance Minister Guido Mantega said. Officials did not freeze portions of the budget set aside for investments and hosting the World Cup soccer tournament. The government may increase abatements against this year’s fiscal surplus goal to 45 billion reais, up from February’s estimate of 25 billion reais (Bloomberg).

With consumer defaults on the rise and confidence among shoppers at a three-year low in Brazil, the nerves are starting to show. Chaos broke out across at least 12 states over the weekend after rumours spread that the government was planning to suspend the nationwide Bolsa Família social welfare programme (FT).

President Dilma Rousseff strongly denied rumors that the government plans to end income subsidy program called Bolsa Familia. Because of the rumors, thousands of people crowded local government banks to withdraw what they believed to be their last subsidy payment (Xinhua).

Investigations of the National Truth Commission should not seek punishment of persons related to deaths, torture and disappearances during the military dictatorship (1964-1985). This is the opinion of former Justice Minister José Carlos Dias, a member of the board. “The purpose of the commission is not punitive,” he said. The punishment for crimes committed during the period will be a topic discussed by the commission at public hearings starting the middle of next year, about six months before the release of its final report. The purpose of the discussions will help define which recommendations the commission will adopt (Folha).

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INTERNATIONAL

An agreement signed on May 20 provides for the expansion of the Open University of Brazil (UAB) in Mozambique. As of 2015, over 2,000 places will be available in mathematics, biology, pedagogy and public administration courses. The consolidation and expansion of the Open University in Mozambique is expected to be implemented in five Mozambican provinces, in addition to the three already in the program (Portal Brasil).

Brazil’s big-spending tourists take New York by storm (FT).

OPINION

Be welcome to check out Brazil Weekly’s interview with Professor Bolivar Lamounier and find out Why you shouldn’t get too excited about Brazil’s new middle class…

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CITY BRIEFS

Check out Brazil Weekly’s new feature City Briefs, a series of introductions to the country’s main economic centers, packed with relevant info for business travelers. First to hit the net were the Brazil Weekly City Briefs on Brasilia, the federal capital of Brazil, Belo Horizonte, the country’s third economic centre and Sao Paulo, the global megacity. Latest City Brief deals with Rio de Janeiro, the Marvelous City!

DEFENSE & SECURITY

Minister of Science, Technology and Innovation, Marco Antonio Raupp, launched the public selection process for the “Inova Aerodefesa” plan, in São José dos Campos (in the state of São Paulo). Under the plan, R$ 2.9 billion will be allocated to support technological innovation in aerospace, aeronautics, defense and public security (Portal Brasil).

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SOCIAL

Brazilian immigration authorities unveiled a set of favorite measures aimed at bringing in more foreign professionals. According to the new regulations published by the National Immigration Council, skilled foreigners can receive a temporary visa allowing them to work immediately for a 60-day term, during which they can present all required papers. The new policy differed strikingly from the old one, which stipulated that foreign workers had to submit the complete documents to the Brazilian consulates in their respective countries before they could obtain a work visa. It usually took 30 days to evaluate the documentation. Moreover, the government will create a digital record of the companies willing to recruit foreigners to work in Brazil, so it will not be necessary for them to present the complete documentation every time they hire a new foreign employee (Xinhua).

OPINION

Be welcome to check out our latest article, a reaction to a recent article in The Economist: Can Brazil Conquer Africa’s Booming Markets?

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ECONOMY

Besides inflation, which is persistently at the upper limit of the target and shows no signs of abating,­ and an expansionary fiscal policy, which contradicts the monetary contraction indicated by what the Central Bank has been doing, other indicators of risk are beginning to emerge from the numerous uncertainties that have characterized the Brazilian economy this year. The origin of the new risks is an area that until recently did not seem to present serious problems: the external accounts. The main source of concern is the trade balance, which this year has accumulated through last month a deficit of US$6.2 billion. Read the FGV-IBRE’s report on Brazil’s economic risks.

Brazil’s economy will grow below 3 percent in 2013, economists predicted for the first time in a central bank survey of about 100 analysts published today. Latin America’s largest economy will grow 2.98 percent this year, down from the previous week’s projection of 3 percent. It would be the first time in a decade that Brazil grows below 3 percent for three consecutive years, Bloomberg reported.

In April 2013, the unemployment rate was estimated in 5.8% for the group of the six metropolitan areas surveyed. Statistically, there was stability both in relation to March (5.7%) and to April last year (6.0%). The unemployed population in April 2013 (1.414 million persons in the set of the six areas surveyed) did not post significant change, both in the monthly and in the annual comparison (IBGE).

The Extended National Consumer Price Index-15 (IPCA) changed 0.46% in May and stood below the IPCA-15 of April, which was 0.51%. With that result, the cumulative indicator of the year was at 3.06%, quite above the rate of 2.39% relative to the same period of 2012. Considering the last 12 months, the index went to 6.46%, going down the 6.51% of the 12 months prior to that period. In May of 2012, the rate was at 0.51% (IBGE).

The preview of the Industry Confidence Index (ICI) signals a high of 1.1% in the index in relation to the outcome of April. The improved perception on the present combined to the advance in the Level of Capacity Utilization suggests acceleration of activity pace in the sector for the month. Regarding the coming months, however, expectations have worsened for the third consecutive month (FGV-IBRE).

An unprecedented multibillion-real plan is the latest federal government initiative to stimulate investment in research, development, and innovation (RD & I), diversify the production of goods and services, and improve productivity. The government seems to have realized that without private investment in innovation, Brazil’s loss of competitiveness will accelerate. The Business Innovation Plan (Plano Inova Empresa) announced in March is expected to attract R $ 28.5 billion in direct investment from the government, plus R$ 4.4 billion from the national petroleum agency (ANP), Electric Energy (ANEEL), and the Brazilian Service of Support for Micro and Small Enterprises (Sebrae). It is also expected to boost private investment in RD&I to correct a major imbalance: too much basic scientific research and too little applied research. Read on at FGV-IBRE.

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BUSINESS

Fibria Celulose SA, the world’s largest pulp maker, plans to raise about 1 billion reais ($500 million) through land sales to pay debt, a step toward restoring an investment-grade credit rating, according to a person with knowledge of the proposal (Bloomberg).

Eike Batista, the Brazilian billionaire whose wealth shrank more than $27 billion since early last year, put one of his private jets on sale as the tycoon cuts costs and divests assets (Bloomberg).

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AGRI ETC.

Recent dryness in Brazil has led to some concerns about the potential yields of the safrinha corn crop, which will begin to be harvested starting in June. Mato Grosso is the largest safrinha corn producing state and the lack of rain has impacted the late planted corn in the state. Farmers in the state planted 80% of the corn during the normal planting window, but the remaining 20% was planted later than normal during the first half of March (Soybean & Corn Advisor).

AVIATION

As evidence that the interrelation between airlinks and urban hierarchy reinforces the hegemony of big cities over time, a new study by IBGE shows that São Paulo is the most central spot of the air network in the Brazilian territory, accordingly to its demography, its economic role and its position among global cities.Being the only “great national metropolis”, with the biggest population and the highest GDP in the country, the city was the leader in the ranking, with a flow of 26,848,944 passengers and 201,132,886 kg of cargo in 2010. Rio de Janeiro, on the other hand, has lost some of its relative importance in air traffic network, although it still holds a second position in passenger transportation (14,467,527 passengers, in 2010), with a less significant position in cargo transportation (37,296,620 kg, the fifth among the 19 cities in the ranking of major cargo handling) (IBGE).

Embraer and SkyWest Inc. announced a firm order, today, for 40 EMBRAER 175 aircraft. SkyWest will operate the aircraft under a Capacity Purchase Agreement (CPA) with United Airlines. Another 60 firm orders are reconfirmable aircraft, which are subject to SkyWest being awarded CPA agreement contracts with major U.S. airline partners. In addition to that, the agreement includes options for another 100 E175s, taking the total order potential up to 200 airplanes. The firm orders for the first 40 aircraft will be included in Embraer’s 2013 second quarter backlog. This sale is in addition to the contract signed by Embraer with United Airlines for 30 firm and 40 options for E175 jets (Embraer).

Embraer Executive Jets announced the sale of an ultra-large Lineage 1000, to an undisclosed European client, operated by Flyinggroup. The aircraft, the first Lineage 1000 sale to a customer in Belgium, will join the Belgium-based company’s fleet and will be available for third-party charter. Delivery of the aircraft is scheduled for the second half of 2013 (Embraer).

BANKING & FINANCE

State-run Banco do Brasil SA is in talks to buy possible takeover targets in the United States, Chile and Colombia, Reuters reported, adding the high value of banking assets in South America is no longer a problem. Any purchase in Colombia or Chile might have to be complemented with organic growth to create a complete banking platform that fits into Banco do Brasil’s business model. Since 2009, Banco do Brasil has avoided buying banks in those countries, saying targets were overpriced.

INFRA

Spain’s development minister said that her country is organizing a consortium of public and private companies to bid on the contract to create a high-speed passenger rail service linking Brazil’s two largest cities. The minister was accompanied by the president of Spanish state railway operator Renfe. The bids must be presented on Aug. 13 (Investe Sao Paulo).

Brazil is sweetening terms for major infrastructure contracts to whet investor appetite and draw private capital and expertise needed to upgrade its deficient roads, railways and ports, Reuters reported. Brazil recently raised the internal rate of return – a measure of profitability – for highway concessions from 5.5 to 7.2 percent previously. Railway projects, including a planned Rio de Janeiro-Sao Paulo bullet train, will offer rates of return of between 7 and 7.5 percent compared to about 6.3 percent previously.

MINING

Brazil is rich in rare-earth elements, it has technologic knowledge to begin extracting and producing these metals, but it needs to improve technology and enable the entrepreneurial sector (Federal Senate).

Brazil’s government plans to submit its mining reform bill to Congress in June rather than this month, energy minister Edison Lobao said, prolonging a wait that is slowing investment in mineral extraction. The bill, first unveiled in 2009, is expected to create an independent regulator, establish auctions for strategic minerals and impose tougher exploration and development schedules for concession holders (Reuters).

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OIL & GAS

Rodolfo Landim, who in 2007 helped Eike Batista set up an oil business before falling out with the billionaire, is competing with his ex-boss to extract crude and gas from northeastern Brazil. Ouro Preto Oil & Gas SA, a company Landim founded in 2010 after leaving Batista’s EBX Group Co., bought exploration licenses for three blocks in Brazil’s north corner near French Guiana. The firm, backed by Turim Investimentos and billionaire investor Julio Bozano, has about 25 employees, among them former executives from EBX and Petrobras, the world’s biggest oil producer in deep waters (Bloomberg).

HRT is abandoning a well that turned up dry in northern Brazil’s Solimoes Basin and another one in Namibia, where it found non-commercial oil volumes, according to a regulatory filing. The company will continue drilling three additional offshore wells in the African country, Bloomberg reported.

Brazil plans to sell the right to explore and develop its largest-ever oil discovery in October, auctioning an offshore petroleum prospect that is expected to produce about 12 billion barrels of oil over 35 years. The sale of the Libra prospect, which would be held a month earlier than expected, will be the first under new “production-sharing” rules that tighten state control and raise government participation in a Bangladesh-sized offshore area near Rio de Janeiro (Reuters).

PORTS

Following dredging work and adjustments to its pier, the Port of Tubarão is scheduled to conclude its first operation to fully load a Valemax ship, the world’s largest iron ore carrier, with total capacity of 400,000 metric tons. It will be the biggest loading operation in the 47-year history of the Port of Tubarão, beating its previous record, set in 2002 when the ship Berge Stahl was loaded with 335,088 metric tons of iron ore (Vale).

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WEEKEND BREAKS!

Brazil Weekly now offers another new feature: Weekend Breaks! Over the next months we will show you how to enjoy your weekend out of town when staying in Brazil’s biggest business cities. First online was your Weekend Break out of Belo Horizonte, to the famous historic town of Ouro Preto, a must to visit. Our latest addition is your Weekend break from Sao Paulo to Guarujá, check it out!

- THE RISE OF THE PACS -

Meet three booming Portuguese-speaking African Countries…!

The rise of the what? Another acronym, you say? Well, why not… In Portuguese the countries are called PALOPs, the Paises Africanos de Lingua Oficial Portuguesa (or African Countries with Portuguese as Official Language). So we call them PACs. Three PACs have become booming economies and nobody is stopping them: Cape Verde, Angola and Mozambique. Check it out!

ATLANTICO WEEKLY

Be welcome to visit Brazil Weekly’s sister publication Atlantico Weekly, with news about Angola, Mozambique and Cape Verde, three upcoming Portuguese speaking countries.

PROJECT OF THE WEEK

Render of the 50 floor Views Privilege Home residential tower for Balneário Camboriú, Santa Catarina.

AMAZON

The National Petroleum Agency (ANP, in Portuguese) announced that the discovery of potential for oil production in the state of Amapá coast, at the outfall of the Amazon River, will be debated at a public hearing at the Senate Committee on Environment, Consumer Protection and Auditing (Federal Senate) .

RIO

With all the FIFA football (soccer) developments happening, one might forget that on August 5, 2016 the Games of the 31st Olympiad will begin in Rio. Some 10,500 athletes will compete in 28 sports, in 35 venues spread across four Olympic Zones: the Barra Zone, Copacabana Zone, Maracanã Zone, and Deodoro Zone, and here is a review of the layout.

Residents of Vila dos Pinheiros and Vila do João, favela communities in the massive Zona Norte (North Zone) Complexo da Maré neighborhood, are preparing for the establishment of a Police Pacifying Unit (UPP), following last month’s entry of armed forces into the area (The Rio Times).

SAO PAULO

Since returning to Brazil from New York in 1994, Mr. Atala has placed the country’s native produce center stage at his restaurants, D.O.M., which he opened in 1999, and Dalva e Dito, which followed a decade later. This summer, he is opening a bar called Riviera. The Wall Street Journal tours the city of Sao Paulo together with Atala.

Restaurant prices in São Paulo have been on the news. Keeping a restaurant open in Brazil has been a big challenge for sector entrepreneurs. Food is increasing in value, even at a international level, but infrastructure, labor and raw material costs, is all-time high and far from economic factors, growing exponentially. The public is feeling the high prices. But if, on the one hand, eating out is expensive now, for entrepreneurs, profit is shrinking (Folha).

Sao Paulo Mayor Fernando Haddad is lobbying for federal aid to triple investment in Latin America’s largest city to 6 billion reais ($2.9 billion) a year by 2016. Haddad, former education minister under President Dilma Rousseff and her predecessor, said the funds will accelerate investments to unlock gridlocked traffic, reduce commuting time and expand health and education. The mayor said he’s working on adding bus-only lanes and smart traffic lights that adjust to vehicle flow, and has a plan to build hospitals, day-care centers and add low-income homes near the city center. To prevent flooding, Haddad plans to restore buffers for rivers that regularly overflow into main thruways in the rainy season (Bloomberg).

More concentrated in downtown São Paulo than in previous years, the Virada Cultural, an event that features musical attractions and artistic interventions in São Paulo during 24 hours, ended on Sunday – however, it was one of the most violent editions in the nine years the event has been held, Folha reported. A year before the 2014 World Cup fan fests, which will also occur in downtown São Paulo, a wave of looting, collective plundering, and robberies upstaged the shows, which again included rap, and also funk and forró concerts, along with major artistic interventions – this year’s edition saw the solution of some infrastructure problems.

Check out what’s on at the prestigious Sala Sao Paulo!

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- NEW EDITION –

BRAZIL WEEKLY’S BRAZIL’S NEXT 10 HOTTEST BUSINESS CITIES

Check out our revised, 2013, edition! No doubt the biggest and most important business centres of Brazil are the megacities of Sao Paulo and Rio de Janeiro and do not forget most other state capitals like Belo Horizonte, Salvador da Bahia, Recife, Fortaleza, Curitiba and Porto Alegre. But Brazil is big and there are plenty of other fast developing cities, not being state capitals. So for a minute forget Sao Paulo, Rio and those other 2014 World Cup host cities and check out Brazil Weekly’s Brazil’s Next 10 Hottest Business Cities 2013.