A broad ranging discussion I had with the Ambassador at his office in Buenos Aires last week.
A broad ranging discussion I had with the Ambassador at his office in Buenos Aires last week.
Brazil and Argentina will cooperate on the construction of two new hydroelectric dams and two nuclear reactors as part of expanded energy cooperation between the two countries. From Reuters:
“We will continue to work to strengthen Mercosur and consolidate the customs union … and we will keep on fighting protectionism by rich countries and policies that distort foreign trade, including exchange rates,” she said.
Brazilian President Dilma Rousseff signed energy cooperation agreements with her Argentine counterpart on Monday during her first official visit abroad since taking office.
South America’s two largest economies are growing briskly and their governments are working to ensure energy supply can keep pace with growing demand from industry and households and sustain long-term growth.
Rousseff and Argentine President Cristina Fernandez pledged to accelerate plans to build two hydroelectric dams on part of the Uruguay River that straddles their border. The Garabi and Panambi dams would have a capacity of 2,200 megawatts.
They also agreed to build two nuclear reactors for investigation purposes and exchange know-how on biofuels. Brazil is one of the world’s biggest ethanol producers and Argentina is a leading exporter of biodiesel made from soyoil.
“I’m sure the accords we’ve signed will prove fruitful,” Rousseff said in a speech at the presidential palace, vowing to boost bilateral ties and the Mercosur regional trade bloc.
Despite the slow pace of the economic recovery in North America and Europe, Brazil has seen remarkable growth in the last few years. In 2010, Brazil created a record 2.52 million new jobs, well above the previous record of 1.61 million new jobs that was set in 2007.
Figures in Brazil show that 2.52 million new jobs were created last year, the Brazilian Labour Ministry reported.
The number surpassed the 1.61 million formal jobs the nation generated in 2007, which was the previous high until now, and contrasts with the 990,000 formal jobs created in 2009 when the country was still suffering the effects of the global economic crisis. This is the highest increase since the statistic began in 1992.
In the last two months of 2010, however, the number of layoffs was greater than the number of hirings and only created some 100,000 net new formal jobs, defined as positions with complete labour and social benefits.
The vigorous expansion of employment is attributed to the solid growth of the Brazilian economy in 2010, estimated at 7.3 percent, following the contraction of 0.6 percent in 2009.
While economists estimated that Brazil was going to end the year with 2.2 million new jobs, the Labour Ministry released a figure significantly higher.
Labour Minister Carlos Lupi said that with December’s results included, 15.04 million new formal jobs were generated in the country during the eight-year presidency of Luiz Inacio Lula da Silva, who left office January 1.
The minister said that with the Brazilian economy forecast to keep up its good performance, Brazil is likely to create close to 3 million new jobs in 2011, the first year of the Dilma Rousseff government.
The increase in formal jobs in 2010 helped reduce the official unemployment rate to 5.7 percent last month, the lowest figure for December in the last eight years.
Congratulations to Dilma Rousseff, the first female president of Brazil! Ms. Rousseff is widely expected to continue the economic policies of her predecessor, Lula da Silva. From MercoPress:
President Lula da Silva’s handpicked candidate Dilma Rousseff won Brazil’s Sunday run-off becoming the first woman president to lead Latinamerica’s largest economy. Ms Rousseff promised to stick to policies that have lifted millions from poverty and made Brazil one of the world’s hottest economies.
Rousseff had 55.2% of valid votes compared to 44.8% for opposition candidate Jose Serra, with 91% of votes tallied, according to Brazil’s election authority.
An economist and former energy minister who leans left but has become more pragmatic over time, Rousseff had never run for elected office. Yet she received decisive support from Brazil’s wildly popular President Lula da Silva, who plucked her from relative obscurity to succeed him.
During Lula’s eight years in office, his stable fiscal policies and social programs helped lift 20 million Brazilians, or more than 10% of the population, out of poverty and another 25 million to join the ranks of lower middle class.
Rousseff who as a student was involved in guerrilla activities, vows to build on Lujla da Silva’s successes by upgrading Brazil’s roads system, schools and other infrastructure as the country prepares to host the 2014 World Cup and 2016 Olympic Games.
She also seeks to exploit the country’s newfound offshore oil wealth and expand the state’s role in the energy sector while continuing to court private investment.
“Her government will focus primarily on solving Brazil’s bottlenecks,” Fernando Pimentel, a close adviser to her campaign, said in a recent interview.
Rousseff lacks Lula da Silva’s charisma, and she has shown limited interest in passing major economic reforms, such as an overhaul of Brazil’s onerous tax code, that many investors say are necessary to reduce the high cost of doing business.
Lula has acknowledged Rousseff lacks political experience but chose her because of her skill as a technocrat and administrator. He says those qualities will be critical over the next four years as Brazil tries to bring its infrastructure in line with its ambitions as an emerging world power.
In 2011 Brazil is expected to surpass Italy to become the seventh largest economy in the world, and India is expected to move ahead of Spain. From MercoPress:
The research unit of The Economist is predicting that Brazil, the eighth largest economy of the world in 2009, with a nominal GDP of 1.5 trillion, followed by Spain, Canada, India and Russia, would continue in the same position during 2010.
However it is expected that in 2011 the largest Latin American economy will climb up to stand in seventh place in the ranking with a nominal GDP of just over 2 trillion. Thus, Brazil would regain the position it occupied in 1994 displacing Italy which it is not expected to reach 1.8 trillion in nominal output. Another European Economy that will surrender position among the largest economies in the world is Spain, being relegated to the 12th post because of the significant advance of Russia and India.
Vale Rio Doce, which is world’s biggest iron-ore miner, is optimistic about its chances of remaining on top, and has several large new projects in the pipeline, including a $12.6 billion nickel mine in the Brazilian state of Pará. From MercoPress:
Vale, which aims to become the biggest mining company in the world, doesn’t need to compete with rivals for assets because it has the highest-quality iron ore and a pipeline of other metals projects, Chief Executive Officer Roger Agnelli told investors in New York on Monday.
“Everybody is looking for assets, they are going after acquisitions and we are not going after acquisitions,” Agnelli said in a presentation. Vale is “very well positioned” after “quietly” buying assets in 2004 through 2006, he said.
Rio de Janeiro-based Vale will start six new projects this year including its Onca Puma nickel mine in Brazil’s Para state after spending $12.6 billion, according to a regulatory filing Monday. The company’s 7.9 million metric tons of nickel reserves put it above OAO GMK Norilsk Nickel, the world’s biggest supplier, according to the presentation. Vale is also planning to expand production of minerals such as copper and fertilizers.
“We are the only mining company in the world that can double the capacity only with our own projects,” Chief Financial Officer Guilherme Cavalcanti said during the same event at the New York Stock Exchange.
“If America had a central bank chief like Y. V. Reddy, the U.S. economy would not have been such a mess,” Joseph E. Stiglitz, the economist and Nobel laureate, has said. In India, there were no subprime loans.
Part of the reason is cultural. Indians are simply not as comfortable
with credit as Americans. “A lot of Indians, when you push them, will
say that if you spend more than you earn you will get in trouble,” an
Indian consultant told me. “Americans spent more than they earned.”
Why did China, India and Brazil all emerge so much more rapidly from the global financial crisis than advanced economies did? In a presentation in Denver to the National Association for Business Economics, Nobel Prize-winning economist Michael Spence, now of New York University, offered several reasons:
* These economies learned bitter lessons in the 1997-98 crisis that afflicted them more than advanced economies.
* They were in “a good initial position” with relatively low leverage, and thus didn’t get hit with the severe “balance sheet recession” that hit the U.S.
* They hadn’t any complex securitized financial instruments.
* They had built up large foreign-exchange reserves.
* Their central banks responded, much as advanced countries’ central banks did, with speed and agility to the credit tightening.
* Their economic managers displayed “a high degree of competence.”
“Is this sustainable? Will they keep growing? I think the answer is a qualified yes,” he said. “I wouldn’t have said that 10 years ago.”
Adding to the sustainability of growth in emerging markets are two other
factors, he said: One, they are increasingly trading with each other
and thus are less dependent on now slow-growing advanced economies; two,
they have become rich enough for their consumers to buy the goods they
In advance of Brazil’s Presidential elections tomorrow. There is no doubt that after 2 terms of President Lula, who built on the reforms of President Cardoso, Brazil is irrevocably a serious country on the international stage. He will be justifiably regarded by most of his fellow citizens as Brazil’s greatest president since that country’s independence in 1822.
Fernando Henrique Cardoso, the former Marxist intellectual colloquially known as FHC, who went on to slay hyperinflation and then twice became president of Brazil, from 1995 to 2002. Few people can claim to have been a philosopher king, let alone to have put the “B” in Bric – the now commonplace acronym, coined in 2001 by Goldman Sachs’ chief economist, that groups Brazil, Russia, India and China. And, although both the world and Brazil have fallen in love with FHC’s successor, President Luiz Inácio Lula da Silva, Cardoso is the man widely credited, at least abroad, with laying the foundations for a boom that has caught many off guard both by its speed and where it has come from.
We discuss why Brazil should have developed an image in the eyes of
the world as an exotic, lazy, tropical paradise, associated with
football, carnival, samba – and not much else. “Because of slavery and
because it was once a European monarchy in a tropical country, it was
much easier for outsiders to stick to preconceived ideas than to do any
analysis,” he says. But, by the 19th century, abetted by waves of
immigration, Brazil already had a strong export sector. And by the
1940s, it had really taken off.
The big change came with the
second world war when, after flirting with Nazi Germany, Brazil joined
forces with the Allies. “Intellectually, Brazil had previously looked to
France; economically, to Great Britain,” says Cardoso. “Now the focus
moved to the United States.” Along with the US investment Brazil
secured in return for its support – CSN, the Brazilian steelmaker built
with US money, is still going strong – the war delivered an automatic
defence from imported goods. Brazil became a closed economy, withdrawing
into itself in the same way that other big countries with huge land
masses such as Russia and China have done. The country’s postwar boom and industrialisation were led by powerful,
centralised governments, at first civilian and democratic, and then,
from the mid-1960s to mid-1980s, under military rule, until democracy
was re-established in 1988. But the transition to democracy, he says, was chaotic, and culminated in
a world-class bout of hyperinflation in 1990, which “only strengthened
outsiders’ preconceived ideas: as well as being exotic, Brazil was not a
now that Brazil has found self-belief, what next, I ask.
big thing is quality,” he begins. “We’ve spent all our lives worrying
about quantity – whether GDP grows or not. Now the question is quality.
What kind of education is this? The main reason children skip school is
no longer economic. It’s because they’ve lost interest. There’s no
point. The quality of teaching is awful.
“We need a new wave of
reforms,” Cardoso continues. “How will we increase productivity to
compete? That means fiscal reform, lower taxes, investment in human
capital and infrastructure.” Read the rest of this entry »
According to a recent Bloomberg poll, Brazil is tied with China as the most preferred place to invest, and India follows close behind in third place.
The U.S. has fallen behind emerging markets in Brazil, China and India as the preferred place to invest, a Bloomberg survey shows, though the world’s largest economy still ranks highest of all major developed countries.
The U.S. ranked first three months ago in the last quarterly Bloomberg Global Poll. Along with the slipping perceptions of the U.S. markets in the most recent survey, conducted Sept. 16-17, poll respondents say the Federal Reserve is likely to take further steps to try to bolster the economy.
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