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Promoting India Latin America Collaboration

The Brazilian Economy is Humming Along

January 27th, 2011 Posted in Brazil, Economics - Indicators, Policy and Trends

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.

From MercoPress:

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.

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Latin America, and Mercosur in particular, leading the global economic recovery

December 3rd, 2010 Posted in Economics - Indicators, Policy and Trends, Latin America

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Latin America, especially Mercosur, is leading the global economic recovery. The forecasted growth in GDP for Mercosur countries in 2011 is 7.5%, and for Latin America in general it’s 5.8%. From MercoPress:

“Things in Latinamerica have rolled much better than expected” in an international context which still faces some turbulences resulting from the prolonged slowdown which begun in late 2008, according to Joaquin Vial, BBVA chief economist for South America

Vial said that besides domestic demand, the booming international prices of commodities have attracted a massive inflow of capital and an overall appreciation of the region’s currencies.

Domestic demand stimuli was followed by a strong consumers and investors confidence reaction, together with a favourable evolution of employment, which helped to begin a gradual withdrawal of fiscal and credit incentives.

In this scenario the countries which currently have the best growth prospects are Paraguay, 10.1%; Uruguay, 8.8% and Peru, 8.5%. Argentina is poised to expand 8%; Brazil 7.5%; Panama, 6% while the only country that could end the twelve months with an economic contraction is Venezuela, probably 2.3%.

Also, see this praise of Latin America from the IMF.

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India set to become second largest copper consumer, Chile to benefit

November 16th, 2010 Posted in Chile, Commodities, India

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Chile’s economic prosperity has been largely fueled by its copper mines, and since India’s demand for copper is expected to rise rapidly over the next decade, Chile’s commodity-exporting future is looking bright. From MercoPress:

COCHILCO, Chile’s copper commission, estimates that by the end of this decade, India’s demand for copper will rise from the current figure of 610,000 tons to between 2.4 million and 3.6 million tons annually.

Due to broad economic growth, India’s increased demand for copper is set to move the nation from sixth place in world consumption of copper to second, just behind China, which accounts for 34% of global copper production, or about 7 million tons.

India is expected to overtake the United States, Germany, South Korea and Japan with this increased consumption –nations whose copper demand today is greater than India’s, but still far behind China’s.

This sharp increase in demand is expected to have an effect on world copper prices.

“With India playing a growing role in the market, the price of copper in the long term would rise about 10%, which is to say, by 20 cents more for each pound,” explained COCHILCO economist Erik Heimlich.

India’s growth rate is also expected to surpass China’s in the next few years, Heimlich said. As a result, Heimlich predicts, “India should change its production structure from services toward more copper-intensive areas”.

Such a shift will allow development of both greater internal consumption, and larger manufacturing production for export.

Heimlich added that copper refinery operators in India had already begun contacting COCHILCO about establishing long-term relationships with Chilean copper producers to supply their growing needs.

Copper production, the principal driving force behind Chile’s economic strength, has brought the country high profits in recent years.

Copper prices Tuesday reached US$4.01 per pound, the highest since June 2008. The rising prices are rapidly approaching the all-time high in June 2008 of US$4.07 per pound.

So far, the average copper price for 2010 is US$3.32 per pound, with a monthly average of US$3.87 per pound.

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Brazil elects its first female president

November 1st, 2010 Posted in Brazil, Politics

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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.

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Likable India: Soft Power

October 27th, 2010 Posted in Uncategorized

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In Latin America, the soft power Indian gurus exert over the literati and intelligentsia is considerable.
With most Indian business houses controlled by families, this affords a natural affinity for Latam business groups with similar ownership structures. Given survey results, Indian business has better long-term prospects in mostly democratic Latin America than in authoritarian African countries.
Sadanand Dhume in WSJ.com

Earlier this month, the industrialist Anand Mahindra donated $10 million
to support the teaching of the humanities Harvard, the
largest gift to the program in the university’s 374-year history. Barely
two weeks later, the $70 billion salt-to-steel Tata Group plonked down
$50 million for Harvard Business School, the biggest international
donation since the school’s founding. In recent years, Indian corporate largesse has also benefited, among others, Yale, Cornell and the University of Pennsylvania. But these gifts also illustrate a broader phenomenon: India’s growing soft power.

The most obvious signs are hard to miss. In recent years, Bollywood-themed dances have invaded wedding celebrations from Sydney to San Francisco. In Britain, curry houses employ more than 100,000 people and generate about £3.5 billion ($5.5 billion) of business each year. And if Yoga Journal is to be believed, an estimated 15.8 million Americans can tell a corpse pose from a downward-facing dog. Indian-born CEOs head such iconic global companies as PepsiCo, Citigroup and MasterCard. In the arts, reports of Indian writers scooping up literary prizes and directors helming big ticket-movies in Hollywood have almost become commonplace.

Scholars and journalists alike tend to make much of China’s vaunted “charm offensive.” It turns out, however, that when it comes to winning hearts and minds—at least democratic hearts and minds—China’s top down state-led model is not much of a match for India’s decentralized private effort.

In terms of goodwill, India bests China in both Western and Eastern democracies. For instance, according to a poll released last month by the Chicago Council on Global Affairs, Americans place India in the same ballpark as long-term allies South Korea and Israel. China elicits only about as much warmth as Venezuela and Mexico.

A recent BBC World Service poll of 28 countries says more or less the same thing. On average, more than half of Americans, Britons and Canadians feel “mainly positive” about India; only about one in six feel “mainly negative.” With China the numbers are reversed. Barely one in three from the Anglophone countries feel mostly positive about the Middle Kingdom; for more than four in 10 the emotions evoked are negative. Similarly, more Japanese, Indonesians and South Koreans feel positively than negatively toward India; with China it’s the opposite. Read the rest of this entry »

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Brazilian and Indian economies on the rise

October 26th, 2010 Posted in Brazil, Economics - Indicators, Policy and Trends, India

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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.

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Brazil’s Vale expects to remain on top

October 19th, 2010 Posted in Brazil, Commodities

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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.

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Why Are India and Brazil Rebounding Faster Than the U.S.?

October 16th, 2010 Posted in Brazil, India

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“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.”

“Savings are important. Joint families exist. When one son
moves out, the family helps them. So you don’t borrow so much from the
bank.”
Real Time Economics – WSJ

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
produce.

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With movie ‘Endhiran,’ Machu Picchu-Peru welcomes India

October 10th, 2010 Posted in India, Media and Entertainment, Peru

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India Real Time – WSJ

Another mountain range is making its debut as the backdrop for a song-and-dance sequence in an Indian movie—if it made the editor’s cut, that is: the Andes in Peru, and the ruins of the Inca city of Machu Picchu located high amid those mountains.

Strictly speaking, we’re talking Kollywood not Bollywood, even if the latter has become the catch-all term overseas for all movies coming out of India. “Endhiran” (Robot), in which Tamil megastar Rajnikanth plays a scientist and a robot and which opens Friday, flew its stars to Peru to film one of the music scenes.

Fernando Astete, director of the Machu Picchu Archaelogical Park, recalled the shoot approximately two years ago.
“We have seen some Indian movies here,” said Mr. Astete. “It was the quintessential music that we see in those movies, with the man falling in love and courting the woman. There were also some Brazilian elements all mixed in. It was something quite exotic.”

The anthropologist said it was quite unusual to get a film crew like this. “Normally we get films about the discovery of Machu Picchu, the Discovery Channel, what was Machu Picchu like, films by National Geographic, that kind of thing,” said Mr. Astete. “The idea was to promote Peru in the vast market of India,” he said. Mr. Astete said the agency that markets tourism to Peru, Promperu, helped the film’s crew with the paperwork in order to be able to film there.

Technorati Tags: india, peru, movie

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Economic Prospects in Peru buoyed by agriculture and mining sectors

October 10th, 2010 Posted in Agriculture, Economics - Indicators, Policy and Trends, Peru

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TheStreet

For instance, Peru — South America’s fastest-growing large economy — has excellent economic prospects with reasonable valuation levels.

Until last year, investors could only buy into Peru through companies like gold miner Compania de Minas BuenaventuraADR (BVN_), copper miner Southern Copper (SCCO_), or the financial Credicorp ADR (BAP_). But iShares MSCI All Peru Capped Index Fund (EPU_) now offers a new way.

Granted, 20 years ago Peru struggled with raging hyperinflation and violent attacks by communist guerrilla groups. A lot has changed since then, and it’s set to grow 7% this year. Most economists can’t help but notice the difference — so should you.
Peru’s Commodity Advantage and More
Peru can trace its mining ties back to a time before the Inca Empire. That same tradition has helped push it into a successful economy today. Similarly, much of its future success relies on its exports of gold, copper and the like.

Fortunately, global mining companies can’t seem to get enough of any of those. In all, they have $41 billion in investments planned there over the next decade. That should quadruple Peru’s copper exports, putting it neck-and-neck with Chile, the world’s biggest producer right now.

Along with mining, the country has other factors going for it, such as agriculture. In the past decade, such exports have surged from $300 million to $2.5 billion.

* Peru exports the world’s largest amount of asparagus.
* The country produces the most specialty coffees, paprika and organic bananas.
* It also reaps significant amounts of cocoa, sugar, artichokes, avocados and mangos.

Right now, that sector only accounts for 8.3% of GDP, though it employs a third of the workforce. But it should grow fast with the introduction of superior farming methods such as drip irrigation. With strong sales in the first half of the year, revenue rose 19% over the same time in 2009 to $1.37 billion. That highlights Peru’s potential in the global agricultural market.