Brazil central bank board lowered the Selic rate to 4.25%, and intends to hold interest rates going forward after five consecutive rate cuts totalling 2.25 percentage points.The economy ministry expects gross domestic product to expand 2.4% in 2020. Annual inflation stood at 4.34% in mid-January, but the real’s performance, the second worst among emerging market currencies so far this year, could fuel price increases by making imports more expensive.
Brazil’s development bank BNDES sold on Wednesday $5.2 billion in common shares it owned in state-controlled oil company Petroleo Brasileiro SA (PETR4.SA), the largest Petrobras offering in a decade. BNDES will send part of the profits to Brazil’s Treasury as dividends. The sale of Petrobras shares is the largest divestiture so far of the R$110 billion stock portfolio owned by the development bank.
Swedish truck and bus manufacturer Volvo announced an investment of R$ 1 billion ($237 million) in Brazil in the period between 2020 and 2023 for research and development of products and services, including construction of equipment and marine engines. Brazil was the second market of the group in the world in 2019 when heavy truck sales grew 58%, light heavy 55.5%, buses 73% and exports, mainly to Colombia and Chile, went up 77%.
Shares in Brazil’s budget airline Gol rose as much as 5.5% on Tuesday after signing a codeshare agreement with American Airlines, that will create “the most frequent service between the United States and South America”. Gol will connect customers to more than 30 destinations in the USA, and American will offer flights to Uruguay and Paraguay, in addition to the Brazilian cities of Curitiba and Foz do Iguaçu.
A strike by workers at Brazil’s Petrobras started on Saturday, has not yet affected “production or supply to the market” and “all of its oil, fuel and derivatives production units are operating within safety standards,” the state-owned oil company said. Around 14,750 workers are on strike, or 80% of the total in the 12 states where the industrial action is taking place, according to Federação Única dos Petroleiros (FUP).
Brazilian mining lobby group Ibram praised a government decision to speed up approvals for mining exploration. Under new rules, the National Mining Agency (ANM) will have to rule on exploration requests within 120 days, and if the deadline passes, the request will be automatically approved. This will “create a more favourable environment” for raising funds for mining in Brazil, Ibram’s Chief Executive Flavio Penido said.
Markets will see R$39.5 billion ($9.3 billion) in share sales in the coming weeks, including the biggest offer since 2010, thanks to the government’s efforts to shed assets and a rush to stocks amid a hunt for returns. Development bank BNDES is leading the charge, unloading a stake worth almost R$24 billion in Petrobras, as well as shares of meatpacker JBS SA. Brazilian equity offerings rose 213% last year to R$115.1 billion.
After two years of expansion, Brazilian industrial production fell 1.1% in 2019, compared to the previous year, according to data from the Brazilian Institute of Geography and Statistics (IBGE). The extractive industry was the one with the greatest negative influence on the results for 2019, decreasing 9.7%, pressured by the lower production of iron ore after the Brumadinho tragedy.
Brazil President Jair Bolsonaro sent a message to Congress saying that his legislative priorities for the year are the tax reform, the autonomy of the central bank, Eletrobras privatisation, entry to the Organization for Economic Cooperation and Development (OECD), job creation and the enactment of a regulatory framework for public sanitation. Lawmakers returned from the Christmas break focusing on local elections in October, something that can hamper the passage of substantial laws this year.
“ASF, coronavirus and a new outbreak of bird flu influence consumer habits and may drive Chinese demand for Brazilian meat,” said Francisco Turra, president of Brazil’s meat industry association ABPA. The new threat reported on Saturday comes as China has been trying to increase local poultry output to substitute for pork. Last year, Chinese imports of Brazilian chicken rose 34% while its imports of Brazilian pork jumped 61%.