Paraguay and Brazil signed a document to make trade logistics centres viable, in order to reactivate trade activity on their borders, which had been paralysed for six months after Asunción decreed the closure of customs to combat the spread of the coronavirus. The logistical centres will be located in areas near the borders. Residents on both sides will be able to shop in the neighbouring cities.
Although the pandemic affects economic activity throughout the country, Brazil recorded the net opening of 782,664 companies in the second four months of 2020, according to data released by the Ministry of Economy. The Business Map shows that 1.114 million new firms were opened from May to August 2020, an increase of 6.0% over the first four months of the year and a rise of 2.0% over the same period last year.
Emerging countries have shown their first signs of expansion since the outbreak of the coronavirus, according to a growth indicator from the International Finance Institute (IIF). The IIF estimates that the recovery is mainly due to improved trade data. Also, purchasing manager indices (PMIs) suggest that the recovery of emerging economies will continue next month.
A partnership between the National Confederation of Industry (CNI) and the Caixa made it viable to sign 35 contracts worth a total of R$ 7 million ($1.3 mm), with the support for micro and small entrepreneurs throughout the country. Among the benefits, the financing lines made it possible to reduce interest by up to 28% and a grace period of up to 60 months for payment.
The Ministry of Mines and Energy (MME) and the BNDES signed an agreement to allow the collection of funds to finance the Mais Luz for the Amazon (MLA) Programme. The project’s goal is to bring renewable energy to 82,000 families in remote areas of the region. In total, the MME estimates that the programme will benefit over 350,000 people. The total cost is budgeted at over R$3 billion ($566 mm).
Brazilian agribusiness exports reached $8.91 billion in August, up 7.8% from the same period in 2019, driven by a 16.5% increase in the volume shipped, particularly soy and sugar, the Agriculture Ministry said. As a result, agribusiness accounted for more than 50% of the country’s total exports in the month, according to a survey by the Trade and International Relations Secretariat.
Brazilian retail sales in July surged to their highest in almost six years, official figures showed, as the continued easing of lockdown measures across the country fueled another strong monthly rebound in activity. The 5.2% rise in retail sales excluding cars and building materials last month was more than four times the median forecast of a 1.2% rise in a Reuters poll of economists. On an annual basis, sales rose 5.5% in July compared with the same month last year, statistics agency IBGE said, more than double the 2.2% rise economists in the Reuters poll had expected.
Cement sales in Brazil continued to rise in August with a 13.6% year-on-year (YoY) increase to 5.7Mt, reported the country’s cement association, SNIC. Per working day, sales reached 244,400t, representing a YoY increase of 18.5%. The central-western region saw sales up 25.3% YoY to 728,000t while in the northeast and north sales advanced to 1,197,000t (+23.9%) and 268,000t (+22.9%), respectively. In the south, sales were up 11.6% to 936,000t. In the southeast, the increase was more modest at 6.7% to 2.615Mt.
The Brazilian government’s administrative reform proposals to simplify and reduce the cost of the public sector will generate at least R$300 billion (($57 billion) of savings over the next decade, according to Economy Minister, Paulo Guedes. This was the first estimate of how much the wide-ranging reforms will save the public purse. The government presented its constitutional reform bill to congress last week, the first of a three-part legislative process. Officials said savings forecasts would come when second and third phases of guidelines on salaries are presented.
The Brazilian government’s spending cap rule faces a “material risk” of being breached from next year onward due to rising political risk and pressure to maintain welfare spending, ratings agency Moody’s said. Breaching the spending cap would push government debt even higher and threaten Brazil’s credit profile. Moody’s expects government spending to drop to about 39% of GDP in 2021 from 42% this year, which will support the fiscal accounts, although this would still be higher than the 38% of GDP pre-pandemic last year.