Brazil’s economy will expand by more than 2.5 percent in 2012 as the government continues to takes measures to spur growth, Finance Minister Guido Mantega said (Reuters).
Brazilian consumer confidence waned in June and analysts chopped their forecasts for the country’s economic growth, as indebted households and risk-wary investors kept a cautious stance despite successive government measures to revive growth. The FGV consumer confidence index slumped 2.8 percent in June from May, its second straight monthly decline, with households expectations worsening for the economy over the next six months (Reuters).
Brazil is not going to escape the onrushing collapse of the developed economies, warns the Central Bank of Central Banks, known as the Bank for International Settlements. In its 214 page annual report released over the weekend, BIS said that Brazil and India, in particular, would suffer an accentuated decline in economic growth due to the problems in the Western powers, most notably in Europe (Forbes).
Brazil’s central bank signaled it will continue to cut interest rates as Europe’s debt crisis and sluggish demand lead to slower economic growth (Bloomberg).
Chief Executive Jean-Charles Naouri, who last week took over as chairman of Wilkes, the holding company that controls Brazilian retail giant Grupo Pão de Açúcar, told Valor Economico in an interview published on Monday he does not see a break-up in which Pão de Açúcar Chairman Abilio Diniz would retain control of the Via Varejo home electronics division as an “appropriate project” (Reuters).
Iguatemi Empresa de Shopping Centers SA, the third-largest mall operator in Brazil, says growing demand from consumers will help it weather a slowdown in retail sales growth to a six-month low (Bloomberg).
What a bumpy road it’s been for Brazilian billionaire Eike Batista these last few months. The man who came in as the world’s seventh richest on the Forbes list of the World’s Billionaires in March –with a net worth of $30 billion — has since shed more than $11 billion of that fortune, largely due to one very volatile stock (Forbes).
Sparse opportunities in Brazil’s ethanol sector have limited the number of new biofuel projects in the five-year investment plan of the state-led oil company Petrobras, Chief Executive Maria das Gracas Foster said (Reuters).
Unfortunately, in Brazil, a nascent wine-consuming market (though a fast-rising producer), as in other countries, the genuine flavor of the terroir is being foregone in favor of processed wines. But as more consumers look for quality organic wines, more producers, throughout the world, are eschewing chemical and technological advances and focusing on classic growth and production methods to produce organic, biodynamic, and natural wines teeming with genuine flavor (The Rio Times).
Brazil’s No.2 airline, Gol Linhas Aereas plans to reduce its workforce by 2,500 employees this year through layoffs, hiring freezes and natural turnover at the company (Reuters).
Chile’s Lan airline has completed a takeover of Brazil’s Tam, creating the world’s second largest airline by market value, to be known as Latam. After two years of negotiations, Tam shareholders agreed to the takeover. The new company will have its headquarters in the Chilean capital, Santiago (BBC).
Embraer SA’s bid to sell more business aircraft in Asia is taking off after the Chinese government gave the world’s fourth-biggest plane maker approval to manufacture the jets there (Bloomberg).
BANKING & FINANCE
Loan delinquencies at Brazilian banks rose to a record in May in a sign that a slowdown is hitting Latin America’s largest economy despite its strong jobs market and aggressive cuts in borrowing costs (Reuters).
Cetip, Latin America’s largest securities clearinghouse, launched the first phase of its new trading platform, in which bond and other fixed-income over-the-counter deals will be registered. The so-called Cetip | Voice device will partially replace trading-by-phone practices and boost price contributions to help traders cut costs and mitigate potential trading mistakes, Ricardo Vit, a general manager for new businesses at Cetip, was quoted in a statement as saying (Reuters).
Brazilian authorities want U.S. investment banking giant Morgan Stanley to return about 113 million reais ($54 million) associated with a stock sale by shareholders of troubled lender Banco Cruzeiro do Sul, which was seized by the central bank this month, Folha de S.Paulo newspaper reported (Reuters).
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MINING & STEEL
Brazil is considering cancelling some mineral rights in areas considered “strategic” and compensating mining companies for prospecting work done on those claims, high-level Brazilian government and mining industry officials told Reuters.
Vale, the world’s No. 2 mining company, said it received an environmental license to build its biggest-ever iron ore mine, an Amazon region project that holds about $1 trillion of reserves at current prices. The S11D mine, an extension of the company’s giant Carajas complex, is expected to cost $8.04 billion to build. It will produce 90 million metric tonnes of iron ore and begin operations in 2016, Vale said (Reuters).
Brazilian mining start-up Ferrous Resources do Brasil SA plans to raise iron-ore output tenfold to 17 million tonnes by 2016 as it races to fill rising demand for the main steel ingredient being driven by Chinese expansion, the company said (Reuters).
OIL & GAS
Brazil’s state-led oil company Petrobras said it will raise gasoline and diesel prices for the first time since 2006, a move aimed at ending refining losses and paying for the world’s largest corporate spending plan (Reuters).
Shares of Brazilian oil company OGX plummeted nearly 30 percent after a disappointing production forecast for its only productive field. Already skittish about a stagnant Brazilian economy after a decade-long investment boom, investors in recent days have begun shedding holdings in one sector that symbolizes much of the recent optimism for Latin America’s largest economy: oil (Reuters).
Vale, the world’s second-largest mining company, may keep its natural gas exploration assets if it succeeds in selling its Brazilian oil assets in order to guarantee energy supplies for its mines, a company official said (Reuters).
For a long time, Brazil’s Petrobras was the state-run oil company that was supposed to show other state-run oil companies how it was done. But burdened with unrealistic government policy, Petrobras is starting to look as broken as some of the industry’s laggards. Years of missed production targets, ballooning costs and investor suspicion that an activist central government will short-change equity holders has turned the former stock market darling into a dog. Read the personal opinion of Reuters journalist Campbell.
Pacific Hydro Pty., the Australia renewable-energy developer, plans to build 500 megawatts of wind farms in Brazil to meet growing industrial demand for energy (Bloomberg).