Category: Brazil

Economists have lowered their expectations for Brazil’s GDP growth this year from 3.27 to 3.12 percent, according to a central bank survey. Brazil’s economy grew only 0.3% in the first quarter compared with the previous quarter, and rose at a weaker-than-expected annual rate of 2.9 percent. The central bank has raised its benchmark interest rate continuously over the last nine months in an effort to rein in inflation. For 2006, GDP growth forecasts remain at 3.50 percent.

Brazil’s inflation rate rose to .49 percent in May, down from .87 percent in April as utility prices and fuel costs declined. The lower figure increases the likelihood the central bank, after nine months of interest rate increases, will maintain its benchmark rate at 19.75 percent when it meets next week. Inflation in the 12 months through May slowed to 8.05 percent from 8.07 percent in April.

Brazilian President Luiz Inacio Lula da Silva said he will keep central bank President Henrique Meirelles in his post, denying reports he was planning to replace him. Speculation mounted last week that Lula would fire Meirelles to show he’s taking steps to root out corruption amid accusations that members of Lula’s ruling coalition paid lawmakers for votes and ran a bribery scheme at state-run companies. In May, Brazil’s Supreme Court approved an investigation by federal prosecutors into allegations that Meirelles made illegal money transfers and underreported assets.

Brazil may run short of natural gas within days as political unrest mounts in Bolivia, leaving the industrial heartland of South America’s largest economy without enough energy to run factories and electricity plants. Roadblocks and plant occupations by Bolivia’s indigenous groups may choke gas flows through the Bolivia-Brazil pipeline in a little as six days, according to Nestor Cervero, head of international operations at Brazil’s state-owned oil company Petrobras. The pipeline supplies more than half of Brazil’s gas needs.

A committee in Brazil’s lower house voted against investigating corruption accusations against President Luiz Inacio Lula da Silva’s party, as congress probes alleged bribery at the state-owned mail company. The constitution and justice committee approved a proposal to conduct the probe, while recommending it be restricted to investigating allegations that Deputy Roberto Jefferson helped suppliers win mail company business through bribery. The committee voted against investigating other allegations, such as Jefferson’s accusation that officials of Lula’s Workers’ Party paid off members of congress to support the president’s programs.

Braskem, Brazil’s largest petrochemical company, plans to launch $100 million in perpetual bonds, the first by a non-financial Brazilian company. Merrill Lynch is coordinating the sale. Bradesco, Brazil’s largest private-sector bank, was the first to launch a perpetual when it raised $300 million last month through Merrill Lynch.

Brazilian President Luiz Inácio Lula da Silva said he’ll back a congressional probe of bribery allegations at state-run companies. The Brazilian Labor Party (PTB), a minor member of the governing coalition, is the target of investigations. PTB leader Roberto Jefferson accused Lula’s Workers’ Party of bribing lawmakers in the lower house. Lula had resisted the probe, saying the charges were politically motivated and designed to slow down his legislative agenda.

Mexico-based America Movil, Latin America’s biggest mobile-telephone company, reduced its earnings forecast for Brazil this year, citing rising costs due to a jump in new subscribers. The company, owned by billionaire Carlos Slim, expects its Ebidta from operations in Brazil to be close to zero for the year. America Movil has deepened discounts on handset prices in the country to meet competition from Telecom Italia and Spain’s Telefonica.

Opposition leaders called on Brazilian President Luiz Inacio Lula da Silva to let a congressional investigation into allegations of government corruption proceed. The scandal began last month when a Brazilian magazine uncovered what it claimed was a kickback scheme in the national post office involving key Lula allies. Lula asserts the allegations are politically motivated and designed to block passage of his legislation ahead of next year’s presidential election. Brazil’s Bovespa stock market index fell 809 points yesterday, or just over 3 percent.

Mercosur invited Panama to become an associate member of the trade bloc, joining Chile, Peru, Ecuador and Colombia, which are also associate members. Brazil, Argentina, Uruguay and Paraguay are founding members of the group. Talks to form a free trade agreement between Panama and Mercosur are expected to get underway soon.