Author: Richard Mann
The Brazilian Development Bank (BNDES) is set to pay out a whopping R$16 billion in dividends to the Brazilian government by 2024. This announcement was made at the Priority 2024 Investment Forum in Rio de Janeiro, showcasing the bank’s commitment to supporting the government financially. The dividends amount to 50% of the bank’s net profit from 2023, which is double the legal minimum required. An additional R$5 billion from 2022 profits will also be included in these hefty payments. This strategic move by BNDES mirrors similar actions taken in 2019 and 2021, highlighting the bank’s consistent approach to supporting government…
Brazil’s inflation rate unexpectedly spiked in May, ending a seven-month trend of slowing price increases. Policymakers now face increased pressure to maintain interest rates stable at the next meeting after data revealed a 3.93% year-over-year price surge, slightly above analysts’ expectations. Central Bank is anticipated to halt its monetary easing campaign to combat rising prices, potentially tolerating more inflation under the current administration. Although service prices exceed central bank limits, they are not increasing significantly despite a tight labor market. Rising inflation expectations, influenced by currency weakness and fiscal concerns, have increased the likelihood of a rate hold at the…
Argentina achieved the top position in Latin America’s mining investment attractiveness index in 2023, surpassing Brazil and Chile. Despite historically ranking lower than other countries in the region, recent efforts to boost the mining sector are closing this gap, according to the National Mining Secretariat. Salta emerged as the most attractive province for mining investments, scoring 77.24 and hosting various projects focused on lithium. The Centenario Ratones project by Eramine Sudamerica is set to produce lithium carbonate for export by the end of the year. Aside from lithium, Salta also hosts copper, gold, silver, and uranium projects, making it a…
Despite a significant 11% year-over-year increase in Brazil’s federal revenue in May, the country is facing a looming deficit dilemma. BTG bank reported the rise, attributing it to a surge in tax collections, particularly from offshore fund stocks. However, the Treasury’s delays in tax payments from companies in Rio Grande do Sul and rising social security costs are contributing to a projected R$58.1 billion deficit for May, exceeding previous estimates. Looking ahead, BTG anticipates a 0.6% GDP deficit for 2024 and a 0.7% deficit for 2025, signaling worsening fiscal challenges. The recent floods in Rio Grande do Sul further complicated…
Chinese investment in Europe has hit a decade-low, dropping by 4.4% between 2022 and 2023. Factors like Beijing’s strict capital controls, the RMB’s depreciation, and the EU’s risk reduction policy have contributed to this decline. However, ongoing investments in European electric vehicle production have mitigated the overall impact. The EU is ramping up defenses against Chinese economic influence, conducting investigations into Chinese subsidies for electric vehicles to safeguard trade relations. Geopolitical shifts are reshaping Chinese investment trends, as the EU strengthens ties with African nations to reduce dependency on Chinese funds and counter China’s controversial Belt and Road Initiative. Political…
Brazil is undergoing a major economic transformation with the approval of a new law that allows all levels of government to convert their owed debts into securities. This innovative approach aims to provide quicker access to funds for the government, especially in light of the fiscal challenges faced by many municipalities in 2023. With a staggering deficit of R$17.9 billion, the need for financial reforms was pressing. Former Senator José Serra introduced the bill, which received overwhelming support in Congress. Once signed into law by President Lula, public institutions will be able to sell their debts to private investors under…
Brazil’s economy has been displaying strong performance, with a 2.5% year-over-year GDP growth in the first quarter, surpassing expectations. Quarterly growth reached 0.8%, and the unemployment rate dropped to 7.5%. Despite these positive indicators, Brazil’s main stock index, the Ibovespa, hit its lowest level this year. The rise of the dollar against the real and the underperformance of the Ibovespa can be attributed to various factors such as the U.S. Federal Reserve’s monetary policy and fiscal concerns in Brazil. The changing interest rate scenario in the U.S. has led to a global liquidity drain, impacting Brazil’s stock market. Investors are…
Brazil is gearing up for 2024 with a strong economic foundation, but UBS BB is warning of potential headwinds ahead. The forecast predicts a modest 0.4% growth in the second quarter, attributing it to decreased consumer spending and lower investments. UBS BB, the Brazilian arm of UBS Group, plays a crucial role in shaping economic trends and investment decisions in Latin America with its expertise in investment banking. Despite some signs of recovery in 2023, the Brazilian economy is facing challenges this year with declining investment rates that could hamper future growth prospects. The nation’s struggle to maintain strong investment…
In 2023, half of Brazil’s municipalities were in dire fiscal straits, with a staggering deficit of R$17.9 billion ($3.42 billion) reported by the National Confederation of Municipalities (CNM). The main culprits behind this financial crisis were declining transfer revenues and mounting public expenses, worsened by the post-pandemic recovery and a weakening federal pact. Budget expert Cesar Lima pointed out that municipalities were facing reduced revenue while being burdened with increasing services mandated by federal laws. The study also highlighted the disparity between federal contributions and municipal expenses, with the government providing inadequate support for essential services like school transportation. As…
Chile’s economy has faced a contraction for two consecutive months, primarily due to declines in mining and commerce, impacting overall growth. The Monthly Economic Activity Indicator for April fell by 0.3%, less than the expected 0.6%, indicating a slowdown in economic activity. Despite a 3.5% rise in activity compared to last year, challenges persist, with informal employment on the rise even as formal unemployment rates decrease. The second quarter of 2021 shows a deceleration in economic growth, despite lower interest rates and a surge in copper prices. April saw declines in mining and commerce, although retail sales surged as predicted.…