• Categories
  • Archives

Brazil to Face International Crisis by Strengthening Domestic Market

Brazilian open market, feira livreIn Brazil and Latin American in general stocks marked their own course on Wednesday and today as the region remained relatively distant to turmoil in the United States and Europe.

The MSCI Latin America stock index was up 1.7% as stocks in Brazil, the region’s biggest equity market by far, rose for the second straight session after plummeting to its lowest level since April 2009.

Brazil’s benchmark Bovespa stock index rose 0.48% as shares of state-run oil company Petrobras (PETR4.SA) gained 3% and phone company Telesp (TLPP4.SA) added 1.6%.

Brazilian stocks have been hurt this year by worries that above-target inflation will take a bite out of real economic growth.

Dropping on the Bovespa was beef processor Marfrig (MRFG3.SA), which lost 6%. The shares have retreated nearly 40% in the past week as a fund sold a large stake to meet margin calls and investors worried the company is overleveraged.

Mexico’s IPC index slipped 0.5% as shares of Wal-Mart de Mexico (WALMEXV.MX) lost 3.3% after Goldman Sachs cut its Walmex rating to “neutral” from “buy” citing uncertainty in sales trends. But shares of billionaire Carlos Slim’s America Movil (AMXL.MX), on of the biggest telecommunications firms in the world, added 1.5%.

Chile’s IPSA index .IPSA surged 2.47% as it gained for the second straight session, rebounding from its lowest level in more than a year.

In Argentina the Merval was down 1.89%, which could be linked to the global decline mainly in the US and Europe. But Argentina is less than three months away from a presidential election and investors are nervous. The country’s Central bank published data showing there has been a considerable ‘fly to safety”.

However Tenaris one of the main shares and linked to the oil industry was down 6.27% and so was Edenar, linked to energy dropping 3.93%.

Colombia’s stock exchange lost 0.11% to 13.071, 59 points while Lima also dropped, 1.27% to 18.969,27 points.

Ready for Bad Weather

For the second time in a week Brazilian president Dilma Rousseff said Brazil was prepared for the global financial turbulence, but stressed that a strengthened domestic market was crucial to overcome the tough times ahead.
 
“We are prepared to face the international financial crisis but the main confrontation to the crisis must be reinforcing our domestic market, creating opportunities here in Brazil, besides exports,” said President Rousseff.

Latin America’s leading economy, and world’s seventh, soon to become the fifth, is on the right track and with the sufficient tools to face the consequences of the European and US crises insisted the Brazilian leader.

Precisely on August 2, while the US Congress voted its debt ceiling the Rousseff administration launched the plan “a bigger Brazil” with tax relief for some of the country’s industrial sectors most castigated by the strong currency Super Real and a flood of cheap imports.

The plan, which also includes soft loans and has been promised to be extended to other vulnerable sectors, contemplates a government renunciation of US$ 16 billion in tax revenue in the next 18 months.

Rousseff said the origin of the crisis can be tracked to the fact that the previous one in 2008 “was not properly addressed and solved by the world’s leading economies.”

But Brazil will take all the necessary measures to ensure the country’s economy can position itself “in the international market with a competitive edge”, recalling that back in 2008 Brazil was “the last country to join the global crisis, but the first to come out”, when the sub-prime crisis exploded in the US.

“Today we are a strong country even for this crisis that is shaking world markets,” said Rousseff and mentioned that Brazil’s international reserves stand at US$ 340 billion and the banking system reserves are equivalent to US$ 300 billion, double the 2008 level.

In 2008 and before the full impact of the crisis, then President Lula went on national television on Christmas to call on Brazilians to continue spending in spite of catastrophic forecasts. Brazilians responded and helped to moderate a strong slowdown of the economy in 2009.

At the time the Brazilian government also called on Congress to help control the budget, limiting requests and the Development bank supplied Brazilian corporations with all the needed liquidity in spite of a tight credit market.

“It is important to ensure fiscal solidity. We currently need a clear harmony between government branches, something which was non existent in the US. From this point of view Brazil was far more mature politically”, said Economy minister Mantega addressing the Lower House during the budget debate.

Mercopress

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

It Happened in Brazil: A Good Deed Is a Reward in Itself

March 9, 1999 is a day which I will remember forever. That day I ...

Chavez Helps Drawing Grandiose Plans for Brazil and South America

The presidents of Brazil, Argentina and oil-rich Venezuela decided together on Thursday, January 19, ...

Brazil Turns to Bill Gates Foundation to Fund Help to African Agriculture

Researchers at Brazilian Agricultural Research Corporation (Embrapa) are in the Democratic Republic of Congo, ...

Everything Seems Wrong, Yet Brazil Is an Agricultural Powerhouse

The record-breaking failure of 18.2 million tons, worth US$ 4.1 million (10 million reais), ...

Brazil Accepts New US Anti-Terror Measures for its Ports

Brazil and the United States have signed an agreement aimed at protecting global maritime ...

Brazil and China Sign Energy Cooperation Pact

A memorandum of understanding to develop bilateral cooperation in the areas of petroleum, natural ...

Lula Again Comes to the Rescue of Brazilian President Rousseff on Corruption Case

The former president of Brazil, Luiz Inácio Lula da Silva said president Dilma Rousseff ...

The Brazil-Venezuela Friendship Has a Multi-Billion Dollar Foundation

Brazil and Venezuela are united by more than camaraderie between Presidents Lula and Chavez. ...

No Yes-Man Anymore

After 100 years playing a subordinate role to the United States, Brazil, under Lula, ...

Brazilian jail

We Need Jails. Education Alone Won’t Put Brazil Together Again.

Some problems are not solved in isolation. One example of this is the violence, ...