Dilma Rousseff is staking her presidency on achieving a “historic” decline in interest rates, betting that is the best strategy for reviving Brazil’s economy in the medium term, members of her economic team told Reuters.
The Brazilian government offered 20 billion reais ($9.78 billion) in cheap loans to states, the latest in a string of stimulus measures to bolster investment as Latin America’s top economy struggles to grow. After a meeting with the country’s governors, President Dilma Rousseff agreed to give out the subsidized loans via the state-owned development bank BNDES to finance infrastructure investment (Reuters).
Brazil’s currency, the real, has been parked over R$2 to the dollar for months now thanks to a combination of weak commodity prices and fiscal measures designed to weaken the exchange rate. But with retail sales a disappointingly low 0.8% compared to consensus estimates of around 1.4%, and the government now falling in line with the market and saying this year’s GDP growth will come nowhere the 4% target, the Finance Ministry decided to make a move on foreign credit transactions last week to help ease the burden of tough times (Forbes).
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President Dilma Rousseff welcomed world leaders to a rainy Rio de Janeiro under a cloud of criticism that a three-day summit is falling far short of its promise to establish clear goals for sustainable development (Reuters).
By the end of the three-day UN environment summit due to end on June 23rd in Rio de Janeiro, a hundred-plus national leaders and representatives were expected to approve a 283-point agreement negotiated in advance by their envoys. The gathering was called Rio+20, in reference to an important environment conference in the city in 1992. But the agreement this time was filled with weasel words and compromises (The Economist).
Brazil and China signed a handful of trade agreements aimed at boosting investment and trade flows for the coming decade, at a time when economic growth in both emerging market powerhouses is losing momentum abruptly. China, the world’s second largest economy, is Brazil’s biggest export market, and Brazil officials hailed the accord as critical to the South American country’s growth. Under the agreements signed by Brazilian President Dilma Rousseff and Chinese Premier Wen Jiabao, relations between the nations will rise to the status of a “global strategic partnership,” highlighting their growing influence in the global economy (Reuters).
Brazil and China will sign an agreement in the coming weeks to swap as much as $30 billion in their two currencies, Brazil Finance Minister Guido Mantega said. The currency swap, worth 60 billion reais or 190 billion yuan, will be the first step in a broader agreement with Russia, India and South Africa to allow members of the so-called BRICS group of emerging markets to pool resources to better weather the global financial crisis, Mantega told reporters in Rio de Janeiro (Bloomberg).
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