Sleeping giant Brazil wakes, but could stumble

Tue May 13, 2008 5:10am EDT
By Raymond Colitt
BRASILIA (Reuters) - From Wall Street to the World Trade Organization, Brazil is finally punching its weight with a booming economy and stronger global leadership but it remains burdened by a bloated state and daunting social problems.
President Luiz Inacio Lula da Silva, basking in the investment grade status Brazil received last month, said it was a "magical moment" for Latin America's largest country.
The economy was previously plagued by boom and bust cycles and rampant inflation, and Brazil was for long dubbed the eternal country of the future, always promising much but never delivering.
But now it is growing at rates of around 5 percent, helping secure its place as one of the four so-called BRIC major emerging economies along with Russia, India and China.
The stock market -- home to world-class companies such as aircraft maker Embraer and oil firm Petrobras -- has gained eight-fold in just over 5 years, helped by economic stability and surging prices for Brazil's huge farm exports.
While many analysts credit former president Fernando Henrique Cardoso with laying the groundwork, former leftist union leader Lula surprised skeptical investors by maintaining market-friendly policies after he took office in 2003.
Abroad, Lula has forged a common front of developing nations to pressure rich nations for freer farm trade, making Brazil a key player in global trade talks.
He has also pushed Brazil's role as regional moderator at a time of growing political divisions between left and right in Latin America.
An estimated 20 million Brazilians have emerged from poverty on the back of cheap credit, welfare checks, and tax breaks, helping to forge a new middle class that in turn is fueling strong consumer demand.
"In my street, there are more new cars and satellite dishes -- we even have two supermarkets now," said Jose Antonio Pereira, a taxi driver from Sao Sebastiao, a low-income satellite city outside the capital Brasilia.
PITFALLS
Investment grade is a seal of approval for investors in Brazil's lucrative financial markets but not for those who have to negotiate the more perilous day-to-day realities.
A high tax burden, red tape, a slow and often corrupt judiciary, and an unwieldy labor market undermine Brazil's international competitiveness.
Brazil came 72nd in a survey on perceived corruption by international watchdog Transparency International, behind Senegal and on a par with India and China.
Lula has lost several key aides, including his finance and energy ministers, to corruption scandals.
"Without reforms to tackle these problems, Brazil cannot maintain its current growth rate," said Flavio Castelo Branco, chief economist at the National Industry Confederation.
At roughly 37 percent of gross domestic product, Brazil's total tax burden is the highest of any major emerging market, acting as a ball and chain on the fledgling giant.
Despite Lula's weekly inaugurations of public works projects, washed out roads and overcrowded ports still cause delays and raise costs for business.
"Everything we gain by investment grade we lose to poor infrastructure," Julio Sergio Gomes de Almeida, former economic policy secretary under Lula, told Reuters.
A maze of taxes and barriers to set up businesses also drag down Brazil's international competitiveness.
"Industry is doing well despite, not because of, government," said Almeida.
With higher income, the poor in many big cities are less likely to go hungry than a few years ago. But many still risk dying of a stray bullet from a shootout between drug gangs and often poorly paid and under-trained police. Few have access to justice, clean water or sewage treatment.
"Investment grade? I don't see much investment here," said Father Jaime Crowe, an Irish priest in Jardim Angela, a rough and poor neighborhood on the outskirts of Sao Paulo.
"The people here are buying more gadgets but that's not sustainable without education, health and security," he said.
Brazil's recent economic strength has been due in part to a global boom in commodities prices with exports from beef to soybeans soaring. Its prospects have been helped by huge oil and gas discoveries.
Although it sells a larger diversity of products to more countries than years ago, a reversal in commodities markets would hit its trade balance and slow growth in the vital agriculture sector.
Social and environment problems, from slave and child labor to violent crime and the large-scale deforestation of the Amazon, also weigh on the country's development, and experts say the government has not pushed through the economic reforms needed to guarantee long-term strength.
"Now is the time to ensure tomorrow's growth but I don't see any signs of economic reforms," Almeida said. "Brazil is already becoming complacent."

Consumo do País deve crescer 6,8%, para R$ 1,7 tri

Rodrigo Postigo
14/05/2008
O consumo dos brasileiros neste ano deve subir 6,8%, em relação a 2007, e atingir R$ 1,7 trilhão, de acordo com estudo da Target Marketing, divulgado pelo Estado de S. Paulo.
A região Nordeste deve ser responsável por grande parte da alta do consumo, beneficiada pela expansão do emprego, melhora da renda familiar, pelo crediário e programas sociais do governo.
Ainda segundo o jornal, o Nordeste deve passar de 16,8% para 18,2% na participação do consumo nacional, ultrapassando o Sul, que deve ficar estagnado nos 16,8%.
O estudo calculou os gastos em todos os municípios brasileiros com base no Índice de Potencial de Consumo (IPC).
A região Sudeste deve manter a liderança, com 51,8% de participação, valor abaixo dos 53,2% registrados em 2007. O Norte pode passar de 5,6% no ano passado para 5,4%. O Centro-Oeste, por sua vez, deve subir de 7,6% para 7,8%, segundo o Estado de S. Paulo.

'FT' ironiza idéia de Lula de o País entrar para a Opep

Agência Estado
14/05/2008

A edição eletrônica do jornal inglês 'Financial Times' contestou ontem a intenção do presidente Lula de incluir o Brasil na Organização dos Países Exportadores de Petróleo (Opep). Ele fez a afirmação em entrevista à revista alemã 'Der Spiegel'.

Para o jornal, mesmo que o campo Carioca seja tão grande quanto disse o diretor-geral da Agência Nacional do Petróleo (ANP), Haroldo Lima, que disse que o campo teria reservas de petróleo cinco vezes maiores do que as estimadas em relação ao campo Tupi, o Brasil "continuaria, pelos padrões da Opep, um membro de segunda linha".

"O Brasil usa muito petróleo, portanto, precisará de anos para se tornar um grande exportador líquido". O 'FT' também argumentou que, se o País aderisse ao sistema de divisão de cotas do cartel, poderia ver ameaçado o fluxo de investimento estrangeiro. Isso poderia afastar o capital externo "num momento em que a indústria do petróleo do Brasil está só começando a concretizar seu potencial". As informações são do jornal O Estado de S. Paulo.

Fundo pode ir na contramão de um ajuste fiscal saudável

Terra / Denise Campos Toledo
14/05/2008
O Brasil terá mesmo um fundo soberano, mas como ele irá funcionar? Apesar de ainda restarem muitas dúvidas, ele já nasce cercado de críticas, uma delas é de que o Brasil não tem excedente nas contas externas nem nas contas públicas para criar um fundo desse tipo, como aconteceu em países como China e Arábia Saudita.
Além disso, as contas externas brasileiras voltaram a ficar no vermelho e o que excede as metas de ajuste fiscal tem sido gerado pelo excesso de arrecadação. Portanto, o tal "cofrinho" que esse fundo pode representar, como colocou o ministro da Fazenda Guido Mantega, virá do bolso do contribuinte.
É também bastante questionável o fato de o excedente fiscal não ser utilizado para reduzir a dívida pública, que tende até mesmo a crescer em função do atual ciclo de alta dos juros básicos. Causou decepção, aliás, o governo não ter anunciado uma ampliação da meta de superávit fiscal simultaneamente à criação do fundo soberano, pois o mercado esperava que o governo se comprometesse com um esforço fiscal maior, via redução de gastos, para viabilizar a criação do fundo.
Vale lembrar que, mesmo com o recente investment grade dado pela Standard & Poor´s, as agências de classificação de risco continuam colocando a relação dívida x PIB como um dos maiores problemas do País, o que pode atrapalhar avanços maiores nessa graduação. O Brasil atingiu apenas o primeiro estágio do investment grade, dado por apenas uma agência.
A intenção de liberar mais recursos para o BNDES financiar empresas brasileiras no exterior é positiva. Mas, além de todos os problemas citados, ainda há o receio de que essa iniciativa acabe interferindo na evolução do dólar, provocando alguma alta maior das cotações, o que pesaria na inflação. Isso, em um momento de índices já bem pressionados, a ponto até de levar o Banco Central a pisar mais fundo no ajuste da taxa básica.
Como os recursos do fundo soberano não virão das reservas cambiais administradas pelo Banco Central, a formação dessas novas reservas do Fundo, estimadas inicialmente em US$ 20 bilhões, pode levar o Tesouro a comprar dólares no mercado, justificando essa preocupação quanto a possíveis efeitos inflacionários.
Enfim, o fundo pode ir na contramão de um ajuste fiscal mais saudável, de uma redução da dívida pública e de um controle mais eficiente da inflação que poderia viabilizar, inclusive, um menor aperto monetário.
Faltam detalhes, mas as primeiras indicações do Fundo Soberano brasileiro não são muito animadoras.

Governo não mexerá no superávit primário, garante Mantega

Rodrigo Postigo
14/05/2008
O ministro da Fazenda, Guido Mantega, declarou nesta terça-feira que, para abastecer o Fundo Soberano de Investimento, lançado ontem pelo governo federal com o objetivo de financiar empresas brasileiras no exterior e de fazer uma nova reserva de caixa para casos de crise, o governo não mexerá na meta do superávit primário, de 3,8% do Produto Interno Bruto (PIB).
O ministro chegou a chamar o fundo de "cofrinho" e apontou, no entanto, para recursos orçamentários, mas não precisou o percentual que será destinado.
O governo deve enviar a proposta de criação do Fundo Soberano de Investimento para o Congresso Nacional até o fianal da semana. De acordo com Mantega, ainda não há decisão se será criado por medida provisória ou por meio de projeto de lei.

Japanese, Swiss and Brazilian Stock Investors Grow More Bullish

By Darren Boey
May 14 (Bloomberg) -- Japanese, Swiss and Brazilian stocks may rise in the next six months, and investors in most of the rest of the world's biggest markets are growing less convinced equities will fall, a survey of Bloomberg users showed.
Japan's Nikkei 225 Stock Average, the Swiss Market Index and Brazil's Bovespa Index will gain, according to the Bloomberg Professional Global Confidence Survey. Fewer investors expect declines in the Standard & Poor's 500 Index, the U.K.'s FTSE 100 Index, Germany's DAX Index and Spain's IBEX 35 Index than in April, according to the poll of 3,447 users in 10 markets from Tokyo to Zurich to New York. Only in Hong Kong, France and Italy did investors grow more bearish.
The MSCI World Index rebounded 11 percent from a 17-month low on March 17, and two-thirds of companies in the S&P 500 reported first-quarter earnings that beat estimates, according to data compiled by Bloomberg. Fast Retailing Co., Japan's biggest clothing retailer, raised its earnings forecast for the year ending Aug. 31. Novartis AG, Switzerland's second-largest drugmaker, posted first-quarter profit that exceeded analysts' estimates. S&P raised Brazil's credit rating to investment grade, sending the Bovespa to a record.
``Sentiment globally is picking up,'' said Lawrence Peterman, investment director at Eden Financial Ltd. in London, who participated in the survey. ``The largest part of the bad news may be with us already, especially with the financials, so it adds to the feeling that we may have seen the worst.''
Stock investors became more bullish as the Federal Reserve provided additional cash to banks, gave credit to primary dealers of government securities and signaled it has cut interest rates enough to spur economic growth.
Japan's Rally
The Bloomberg stock confidence index climbed to 51.1 in Japan this month from 46.8 in April. Readings above 50 indicate that more users expect stocks in their country to rise than to decline in the next six months.
The dollar's 8.1 percent increase against the yen from a 12-year low March 17 boosted the profit outlook for Japanese exporters. A stronger dollar increases the amount of U.S. revenue when converted to yen.
The Nikkei jumped 20 percent since March 17, when it was valued at 13.4 times earnings, the lowest since at least April 2000, according to data compiled by Bloomberg. Yamaguchi City, Japan-based Fast Retailing raised its full-year profit forecast last month after March sales surged.
``Japan's stock market will remain robust,'' said Hideyuki Ookoshi, who helps oversee the equivalent of $365 million at Chiba-Gin Asset Management Co. in Tokyo. As lower interest rates ``help prevent the U.S. economy and stock market from worsening rapidly, the dollar is very likely to stay strong against the yen, which helps Japanese businesses,'' Ookoshi said.
Biggest Gains
Investors in Brazil, Switzerland and the U.K. recorded the biggest gains in sentiment over the past month, according to the survey. The stock confidence index for Brazil jumped to 82.5 from 66.8. The Swiss index rose to 52.9 from 44.7, while the U.K. climbed to 31.4 from 26.4.
Bloomberg users were most bullish on Brazil's benchmark stock index, after S&P on April 30 raised the country's long- term foreign currency debt rating to BBB- from BB+. Brazil, whose economy grew last year at the fastest pace since 2004, should be able to maintain annual growth of as much as 4.5 percent, the rating company said.
Higher commodities prices also helped lift shares of the nation's metals, oil and sugar producers and send the Bovespa 10 percent higher this year.
Novartis, ABB
Investors in Switzerland predicted gains for the first time this year after Basel-based Novartis and Zurich-based ABB Ltd., the world's largest builder of electricity networks, reported profit that beat analyst estimates. The Swiss Market Index climbed 12 percent since March 17.
The U.K.'s increase left Spanish investors the most pessimistic in the May 5 to May 9 survey, even as sentiment climbed to 29.3 from 28.3. The confidence gauge fell the most among the 10 markets in Italy, dropping to 42.7 from 48.7.
In the U.S., the stock confidence index rose to 35.8 from 34.6 in April. The S&P 500 has climbed 10 percent from a 19- month low on March 10 as companies from Peoria, Illinois-based Caterpillar Inc. to Mountain View, California-based Google Inc. reported profit that beat analysts' estimates. Europe's Dow Jones Stoxx 600 Index has gained 12 percent from its 2008 low and the MSCI Asia Pacific Index has advanced 13 percent.
``People are definitely starting to feel better about the U.S. market,'' said Doug Peta, a market strategist at J&W Seligman & Co. in New York, which oversees $19 billion. ``Earnings were pretty good. But I don't think it's off to the races. There's still work to do.''

Relatório sobre reforma tributária deve ser votado até o fim de junho, prevê relator

Agência Brasil / Daniel Lima
14/05/2008

O relator da proposta de reforma tributária, deputado Sandro Mabel (PR-GO), disse hoje (13) que espera que o relatório seja votado até o final de junho. Mabel, o presidente da comissão especial que analisa a reforma tributária, deputado Antonio Palocci (PT-SP), e o secretário de Política Econômica, Bernard Appy, discutiram hoje como deve ser o encaminhamento do proposta no Congresso Nacional.

À tarde, eles participam de novo encontro para tratar do assunto, dessa vez com governadores do PSDB, PT, PSB, PMDB e PDT e o ministro da Fazenda, Guido Mantega.

Sandro Mabel voltou a defender que a reforma beneficiará a população e que não será mais um instrumento de arrecadação. O relator afirmou, porém, que as entidades que discordam do texto por achar que não haverá justiça fiscal devem ter a certeza de que suas propostas serão analisadas."Vamos analisar. Mas a grande beneficiada vai ser a população. Ao longo do tempo, a reforma vai permitir uma simplificação [de impostos], vai dar competitividade às empresas, o governo vai arrecadar mais e, ao atingir um teto de carga tributária, vai ter que desonerar, e aí vai desonerar o arroz, o óleo de soja, o pão e o arroz", disse.

S&P unimpressed by Brazil's new industrial policy

Tue May 13, 2008 5:29pm EDT
By Walter Brandimarte
NEW YORK, May 13 (Reuters) - Brazil's recently-unveiled plan to boost exports and specific sectors of the economy was taken with a pinch of salt by rating agency Standard & Poor's, which noted the high fiscal costs to be incurred by the government.
Brazil will deliver up to 21.4 billion reais ($12.7 billion) in tax breaks through 2011 in an attempt to bolster the economy, Finance Minister Guido Mantega announced on Monday.
The plan will likely benefit sectors that have been hurt by the appreciation of the Brazilian currency. But S&P, which upgraded Brazil's credit ratings to investment grade less than two weeks ago, said "picking winners and losers" might not be the best approach.
"Another option would be to improve investment climate, cut taxes across the board, reduce the cost of doing business in Brazil," S&P analyst Lisa Schineller said on Tuesday on the sidelines of a conference organized by the Brazilian-American Chamber of Commerce in New York.
Schineller noted that government initiatives to promote targeted sectors has worked in many Asian countries but said there is always the risk that the government might "be trying to make competitive a sector that is not going to be competitive."
Brazil has "some room" to accommodate the increased fiscal stimulus, Schineller said, adding however that S&P would prefer to see policies aimed at reducing the country's debt-to-GDP ratio at a faster pace.
Exporters have long complained that the strength of the real, currently at a nine-year high against the dollar, are making Brazilian products less competitive abroad. Brazil's upgrade by S&P, although widely celebrated in the country, left exporters even more concerned as it raised prospects of further currency appreciation.
But Schineller said that the return of current account deficits in Brazil, coupled with some growth slowdown, should curb the real from strengthening even more.
"I see it moving close to 1.8 reais per dollar by the end of this year. That's the scenario I'm working with," said Schineller.
The real closed at 1.657 per greenback on Tuesday.