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Violent protests spark U-turn on transport fares

June 19th, 2013

Protestors in Brasilia: Photo: Agencia Brasil

Rises in public transport fares in São Paulo and Rio de Janiero that sparked nationwide protests have been cancelled following talks between city and state governments.

The scope of the protests that at times have been marked by violence and looting has widened to include the cost of the the Confederations Cup and next year’s World Cup football tournaments, as well a lack of investment in health, education, basic sanitation and other infrastructure.

Corruption among public officials such as judges and congressmen, who regularly vote themselves hefty pay increases on top of salaries beyond the wildest dreams of poor and even well-paid middle class Brazilians has also become a target for protestors’ anger.

Social media sites have been crackling with chatter and the exchange of information about the demonstrations.

One graphic shared on Facebook showed a congressman picks up more than 25 times the monthly salary of a fireman. Another listed the names of 200 congressmen said to be in favour of a constitutional amendment aimed at limiting their immunity from prosecution.

Brazilian football great Ronaldo, a World Cup winner in 2002, became a target for satirists and cartoonists, after reportedly saying “you can’t have a World Cup with hospitals” during a recorded broadcast.

Some Brazilian fans risked the wrath of FIFA President Sepp Blatter holding up placards protesting at corruption at the Confederations Cup match between Brazil and Mexico on Wednesday in Fortaleza in the northeast of the country, where Brazil ran out 2-0 winners. Political protests at matches are against FIFA rules.

Demonstrations started last week after the price of a single journey ticket in São Paulo was increased on June 2 from R$3 ($1.38) to R$3.20 ($1.47).

Though São Paulo and Rio have now followed the lead of other cities in cancelling the rises, demonstrations have continued with main highways leading in and out of São Paulo and a bridge connecting Rio de Janeiro with Niteroi among the routes being blocked by protestors.

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Massive new government growth programme announced

March 30th, 2010

Lula's public approval ratings stand at 76%. Photo: Agencia Brasil

Brazil’s government has unveiled a second rapid growth acceleration programme worth $890 billion, aimed at boosting the country’s economy and infrastructure.

The original so-called ‘PAC’ programme to the tune of $280 billion announced in early 2007 targeted 5% growth a year.

Apart from last year when Brazil suffered fallout from the global economic downturn, targets were met,  though the government and opposition dispute how much of the original programme has actually been completed.

The new programme runs between 2011-2014 and beyond. Projects are grouped into in six categories.

Oil and gas exploration projects will get $ 490 billion, two-thirds of the money after 2014, with $76 billion destined for electricity generation and $70 billion going into projects to drill Brazil’s vast untapped oil resources buried deep below the seabed.

Housing initiatives will get $ 154 billion. Last March, the government announced a $15 billion social housing programme, aimed at building one million homes, though it left the timetable open-ended. The new plan envisages the building of another two million homes. Brazil’s housing shortage stretches to seven million.

High stakes game

With Presidential elections in October, there is little doubt that ‘the son of PAC’ as it has been dubbed will be the flagship policy of the ruling Workers Party (PT) and its official candidate, Dilma Rouseff, who is aiming to become Brazil’s first woman president.

She takes on Sầo Paulo state governor José Serra, whose colleagues immediately attacked the new proposals.

The leader of the main opposition party (PSDB) João Almeida said the government should be re-evaluating the original programme, which he said is weak in management terms, with a low rate of projects being carried out.

“The launch of PAC 2 was an act of campaigning complete with crying and emotion,” he said.

But the government hit back saying the opposition is divorced from the Brazilian people and the interests of the country.

“The opposition only speaks about the election, denunciation, criticism, because they have no other plan,” said Cândido Vaccarezza, the ruling party’s leader in Brazil’s lower congress chamber.

The government says 40% of the original programme has been finished, insisting two-thirds of work on housing and sanitation has been completed, though this falls to 28% in the energy and logistics sectors. Opposition parties banding together say only 11% of work has been done, with the number falling to 4% in the northeast of the country, where it is most needed.

But so far any such talk has had little effect.

Recent reports that the president and his preferred candidate had toured the country together inaugurating unfinished infrastructure projects and that he made comments appearing to back Cuba’s oppressive stance towards dissidents have not dented his standing with the Brazilian public.

As the election approaches Dilma will be hoping to be swept along on a tide of approval from the new programme, as much as for outgoing President Luiz Inácio Lula da Silva, who continues to notch up astonishingly high poll ratings for a second-term president with only nine months left in office.

Dilma may have her work cut out though. A Datafolha poll published at the weekend showed Lula’s stardust has yet to rub off on her, with the vote between the main presidential candidates tied among those who would normally vote for the president.

Since declaring his candidacy recently, Serra has opened up a nine point lead over Dilma, having received an expected ‘bounce’ from the announcement.

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Volkswagen swells Brazil foreign investment legion

November 27th, 2009

The announcement of a $3.5 billion investment by Volkswagen on Thursday is the just the latest in a string of recent moves by foreign companies in Brazil.

VW intends to spend the money by 2014, when it will also sponsor the country’s national football team as it hosts the FIFA World Cup for the second time.

VW’s investment comes hot on the heels of Ford, which last week said it will plough $2.3 billion into an expansion programme until 2015.

Brazil’s car makers are expecting record sales this year after temporary cuts in taxes paid by producers were passed onto buyers

Michelin too is getting in on the act, investing ‘hundreds of millions of dollars’ in a new factory in Rio de Janeiro state, aimed at doubling its tyre making capacity in Brazil.

If that were not enough, October saw foreigners line up to invest $17.1 billion into Brazil’s financial markets - a record since the country’s Central Bank began calculating figures in 1947.

Whereas Brazil’s economy would have been devastated by such a global economic downturn downturn in the past, the relative lack of exposure of its banks to toxic US mortgage debts that fuelled the crisis have helped the country pull through largely unscathed.

Having been one of the last countries around the world into recession, Brazil was one of the first out, after economy returned to growth in the second quarter of this year.

While his precedessor Fernando Henrique Cardoso can quite rightly claim much of the credit for the groundwork laid for Brazil’s current stability, those who previously mocked Brazilian President Inácio Lula da Silva’s comments that the crisis would prove to be a small wave rather a tsunami, may be entitled to feel just a little foolish.

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Brazil gets foreign investment boost

September 22nd, 2009

Brazil’s hopes of luring greater levels of foreign investment received a shot in the arm on Tuesday, when investment ratings agency Moody’s raised the country’s government-backed bonds to investment grade.

Though Moody’s is the last ratings agency to do so, it is not ruling out a further upgrade to Brazil’s so-called ’sovereign debt’.

“Evidence of strong economic and financial resilience…can be seen in the modest and short-lived contraction in GDP, minimal weakening in the country’s international reserve position, moderate deterioration in the government debt indicators and lack of financial stress in the banking system,” Mauro Leos, Moody’s regional credit officer for Latin America said in a statement.

Moody’s is also reviewing Brazil’s foreign and local currency credit ratings for possible upgrade, citing the country’s resilience to the shocks from the global financial and economic crises.

It’s more good news for Brazil’s government, after the country pulled out of recession in the second quarter from April to June by posting 1.9% growth. The technical definition of a recession is when the total of all the goods and services in an economy (GDP) has shrunk for two consecutive quarters.

Brazilian President Luiz Inácio Lula da Silva, who was criticised by some at the start of the global crisis for saying the downturn would prove to be a ‘little wave’ not a tsunami was last week lauded by French newspaper Le Monde for his insight.

Opponents have called it a lucky guess.

Economy, News

Brazilians still shopping as going gets tougher

May 14th, 2009

Brazil’s worst set of industrial employment figures in eight years are reflected in latest official numbers and though shoppers haven’t stopped filling their baskets, what they are buying may point to a subtle change in habits.

The number of workers employed in the industrial sector fell by 5% in March compared with the same month last year, with analysts saying if they weren’t already, all sectors of industry are now being affected.

Nowhere more so than automobile sector. After four straight months of rising sales, inspired by cuts in production taxes, the recent recovery shuddered to a halt in April.

Tell-tale signs are also in the steel industry, which relies on the auto sector for orders.

Producers have been running at half their normal capacity with no one in the industry prepared to make forecasts for the rest of the year.

And if that weren’t confirmation enough that the economy is spluttering, Development, Industry and Foreign Trade minister Miguel Jorge conceded Brazil is in technical recession - the first government figure to do so.

Since the onset of the global economic downturn last September sparked by the international credit crisis, economists have been whittling down their growth forecasts for Brazil from an initial 5% for 2009 to as low as a 1.4% contraction.

Photo: monkey magic, flickr

Photo: monkey magic, flickr

The forecast contraction failed to hit home in the household consumption of food, drink, health, beauty and cleaning products in the first three months of the year, as sales rose among all socio-economic classes.

Spending among the lowest income groups increased 15% in cash terms and 9% by volume, according to figures from retail analysts LatinPanel .

That word household may be a pointer to what is actually happening economists say, as people prefer to dye their hair at home rather than paying the hairdresser.

Spending on food to eat at the dinner table is also rising faster than on eating out.

“The consumer is changing habits and this should continue to the end of the year,” one economist was quoted as saying.

Not everyone is doing badly.

Given the still massive disparity between the wealthy and poor in Brazil, it’s perhaps not surprising to find upscale supermarket chain Pão de Açúcar doing well.

So well in fact, the chain tripled its profits to R$94.9 million ($44.8 million) in the first three months of this year versus the same period in 2008 on the back of cost cutting and increased sales.

Brazil’s government will hope some of that feelgood factor will be transmitted to makers of white goods such as fridges, freezers and washing machines, after it cut production taxes in a bid to boost demand.

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Brazil confronts chronic housing shortage

March 30th, 2009

A $15 billion social housing programme announced by President Luiz Inácio Lula da Silva last week could hardly have been timelier, given the worldwide economic crisis now biting in Brazil, but the plan faces huge challenges and its future may hinge on the political will of Congress and the next government.

Photo: kathiao, flickr

Photo: kathiao, flickr

The programme aims to build one million homes for families with combined incomes of up to ten times the minimum monthly wage R$465 ($203).

The plan has won praise for its focus on providing hefty subsidies to the poorest households, whose income only stretches as far as three times the monthly minimum and for the fact it gives title to the property to the woman of the household – something that is seen as protecting the family.

“This has become more important in this moment of crisis because it generates jobs and the capacity to provide homes for low income people,” says Dr Lílian Fessler Vaz from the Architecture and Urban Development Department at Rio de Janeiro Federal University.

Much of the money is being stumped up by Brazil’s Treasury with contributions from the FGTS social welfare fund paid by employers and the national development bank (BNDES).

Massive job

Brazil’s National Industry Confederation (CNI) welcomes the move as a step in the right direction but warns the programme will require massive coordination

“Judging by the experience of other projects it’s a very difficult task to fulfil,” CNI Executive Director Jose Augusto Coelho Fernandes says.

The scale of the undertaking was underlined in government figures reported in February, showing that only 11% of projects announced under the government’s growth acceleration programme (PAC) launched two years ago have been completed.

The programme’s aim is to enable Brazil to grow at least 5% a year.

Brazil’s economy grew 5.1% last year, but the government been under pressure to take action, after the economy shrank 3.6% in the last quarter of 2008 versus the previous three months.

Economists and industry organisations are forecasting anywhere from zero growth to a 1.5% contraction in Brazil this year.

The government calculates the programme will add to 2% to Brazil’s Gross Domestic Product (GDP), the sum of all goods and services a country produces.

Meanwhile, fears have been expressed that progress on the homes building programme could be hampered by environmental issues, the ability to synchronize projects with existing urban development plans, as well as complex issues such as subsidies, insurance, guarantees and land ownership.

Questions have also been raised whether construction companies actually can build homes put at R$40,000 ($17,500) for the lowest income groups.

Though not referring directly to the housing programme and writing in the Folha de São Paulo newspaper on Sunday, Roger Agnelli, President of Brazil’s, Vale the world’s biggest producer of iron ore used to make steel said the government has to cut down on bureaucracy to get the economy moving again.

Scrutiny

Brazil’s opposition parties question the timing and motives behind the announcement, insisting Lula is using the programme to try to ensure his preferred candidate and Chief of Staff Dilma Rousseff wins the presidential poll at the end of next year.

Photo: Agencia Brasil

Photo: Agencia Brasil

No deadline has been put on completion of the million houses and Lula (pictured right) concedes it will go beyond the second and final term of his presidency, which has another 21 months to run.

Given the size of the task, by announcing the move now the president must be banking on three things: That his candidate wins the election, the next government either has the political will to continue the programme or will be too afraid to drop it for fear of losing popularity.

Lula will also have to count on cooperation from 26 diverse state governments, municipalities, private companies in the construction sector and perhaps most crucially often self-serving politicians in the country’s capital Brasilia.

One media report suggested in a bid to overcome resistance in Congress, 63% of building work will take place in states where Lula has forged political alliances.

Though the programme has been praised by some in the construction sector as a bold first step,  Brazil still has a long way to go to plug its housing shortage of more than 7 million homes.

Almost 91% of that figure are said to be in the lowest income group.

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Speed dating Brown seeks Brazilian partner for trip abroad

March 26th, 2009

British Prime Minister Gordon Brown shouldn’t have to work too hard to convince Brazilian President Luiz Inácio Lula da Silva of his anti-protectionism message in talks in Brazil this week, ahead of April’s G20 summit.

Gordon Brown: Banging free trade drum Photo: 10 Downing Street, flickr

Gordon Brown: Banging free trade drum Photo: 10 Downing Street, flickr

Brown is investing much time, effort and political capital in hosting next’s month’s summit, and will be encouraged to hear Lula has already been out doing some of his work for him - at least in Washington.

Brazil has already voiced strong opposition to the ‘Buy American’ clause in the U.S. package of measures, aimed at reviving its ailing economy.

The prime minister will also be urging President Lula to back his calls for tighter regulation of the global financial sector to prevent the world getting into the same mess when things pick up.

Brazil hasn’t suffered from the banking crisis to the same extent as some of other the world’s major economies, but even so Brown will see Lula leader of the world’s tenth biggest economy as an important ally at the G20 summit.

But next month Lula may have to avoid getting caught in the crossfire between those in the United States who say the European Union member states are not doing enough to stimulate demand, while Europeans are worried at what they see as a U.S. reluctance to put in place measures to prevent the world sliding back into crisis.

Photo: 10 Downing Street, flickr

Photo: 10 Downing Street, flickr

Rallying cry

By Brown’s side in Brazil will be his Business Secretary Peter Mandelson who will be giving his view on how to solve the global economic crisis to industry leaders in São Paulo on Thursday.

Mandelson, a former EU trade commissioner is likely to echo the rallying cry of Pascal Lamy, Director General of the World Trade Organization  (WTO) for a strong commitment from global leaders to wrap up the stalled Doha round of world trade negotiations that have dragged on for eight years.

Doha aims to boost international commerce by lowering barriers to trade between countries, but despite several attempts to jump-start talks, differences on agricultural subsidies, industrial tariffs and non-tariff barriers, services, and trade remedies have derailed the process.

The biggest bones of contention are between the big beasts of world trade, the European Union and the United States, and major developing countries, such as Brazil, India, China and South Africa.

While Brazil and others want the United States and Europe to tackle the thorny issue of cutting subsidies paid to their farmers, to allow exports to compete on level playing field, wealthier nations want greater access to Brazilian and other countries’ goods and service markets.

It’s not clear who if anyone will give ground to break the deadlock, but the economic crisis has at least added to the sense of urgency to get talks moving again.

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