LyrArc Article Gist
The Rousseff administration announces plans to cut $30 billion in 2011 spending. Inflation is up by about 6% in January. Most of the cuts says Finance Minister Mantega, will be achieved by cutting earmarks added to the budget, and by slowing hiring in the public sector. But analysts say this will not be sufficient to control inflationary pressures, as 2011 spending will still be above 2010. Higher inflation puts pressure on the central bank to raise interest rates at an high of 11.25%, which in turn brings in speculative money and creates a highly overvalued currency.

LyrArc Article Gist
President Enrique Pena Nieto proposes changes to the constitution in August 2013 to modernize Mexico's Pemex and open it up to working with foreign oil companies. Recognizing that a majority of public opinion is opposed to changes, Nieto gets the support of the PAN opposition party for a two thirds majority in parliament. He also navigates the difficult waters of Mexican history and the nationalization under President Cardenas in 1938, by saying: "Pemex will not be sold, nor privatized...The spirit of this reform recovers the best of our past to conquer the future." Previous reform effort in 2008 failed because of protests on the streets of Mexico City. A stalling Mexican economy and lower oil production has created new momentum for the effort to modernize Pemex and introduce better management for oil resources and new technologies. A consensus between the ruling PRD party and the PAN opposition party gives Nieto the two thirds majority needed, and sufficient support from the right and centre political parties to carry this through. The example of Brazil's Petrobras, which has discovered oil in the deep waters of the Atlantic and developed its own technological capabilities by working with foreign oil companies, also gives Mexico an example to follow. Under President Cardozo Brazil opened up its oil industry to work with foreign oil companies in the 1980's....

LyrArc Article Gist
The inflation index for Brazil went up by 5.99% in January 2011, compared to the prior year. Prices went up by 0.83% in January, compared to December 2010. Brazil's central bank surveys show rising expectations for inflation in the country. This creates pressures for the central bank to raise interest rates above the existing 11.25% overnight interest rate, which is already one of the highest worldwide. Higer rates would worsen the impact on the currency as it accelerates volatile money flows into Brazil. The soaring Braziling curency is widely considered to be highly overvalued and a volatile currency hurts Brazil's growth prospects. Brazil's government spending under the Luis Da Silva presidency was increasing rapidly and cuts in spending are expected, though there is skepticism that the incoming President Rousseff will control spending.

LyrArc Article Gist
There is concern that though President Da Silva has had success in his term in office, he is leaving problems for the new administration. One expert says he leaves a giant question mark behind him. One of the problems is high spending by his administration. After the financial crisis of 2008, the government flooded massive state run banks with cash, ordering the banks to to lend heavily to businesses and consumers. The government also increased its own spending on contracts and projects. Public spending has continued to grow since 2008, and federal expenditures as a percentage of the economy have doubled during Da Silva's term in office. In an editorial recently, the newspaper O Estado de S. Paulo, says the government should have used the high growth in the economy to cut public spending and improve the public finances. Because the Rousseff administration is a continuation of Da Silva's administration, and includes many of the same people, the daily asks if the Rousseff team's promises to cut spending in 2011 are believable. Inflation in 2010 is at 6%. The other serious problem is an highly overvalued currency, and volatile capital inflows from developed countries. The boom in China has helped Brazilian commodities and agricultural exports, a slowdown there would affect Brazil's economy. ...

LyrArc Article Gist
There is not much difference between the two candidates for President of Brazil. Jose Serra is similiar in his views to Ms. Rousseff about the government having a strong role in the economy. Rousseff is backed by the outgoing President. She has increased her lead in the polls, and leads Serra by 10 points according to one poll.

LyrArc Article Gist
The issues China faces as it plans the next phase of massive urbanization. Urbanization is a major priority of prime minister Li Keqiang, which was also the focus of his postgraduate work in his student days. In the early 1980's about 20% of China was urbanized, this has changed over three decades to where the figure is 47%, plus 17% for workers working in the cities but classified as rural, a total of 64%. China's plan is to fully integrate 70% of the population or 900 millon into cities by 2025. In 2013 only 35% of the population has a urban residency permit, or hukou. The permit is needed for residents to register their children in local schools or qualify for medical programs in urban locations. One of the problems is the huge cost of doing this which it is feared could lead to inflation and higher debt levels. Currently local governments bear these costs using land sales, and central government transfer payments, but without added financing and unable to issue their own bonds, the local governments strictly limit the use of local school and health services to their own residents keeping out rural newcomers. Local government taking over farmer plots, often without enough compensation is highly unpopular in China. Other problems are- providing a steady stream of earnings for new urban residents from farms, if no employment can be found. So they can sustain themselves- especially as they get past 40 years of age when factory employment is harder to find. The government planners see the larger urban population as a way to shift from a largely export based economy and slowing growth, to a consumption based economy. But critics say the risk is that for this to happen new residents from the farming villages have to find jobs, something the government will have difficulty accomplishing. A permanent underclass of unemployed and other financially strapped citydwellers living around major cities, as has happened with the progress of urbanization in Brazil and Mexico, is something the government would want to avoid. ...

LyrArc Article Gist
Remittances to developing countries are an important part of the social safety net in these countries. They are spent quickly so they help support food and housing costs, help reduce the impact of an economic downturn, and leave more money for health and education expenses. Remittances to Latin America and the Caribbean were at about $69 billion for 2007 and 2008. Now these remittances are declining. Mexico's declined by 12% in January 2009, Columbia suffered a16% drop, Brazil a14% decline, Guatemala and El Salvador a 8% decline. For countries like Guatemala remittances at $4.3 billion are ahead of coffee, and sugar, and 10% of the people some 1.35 million live in the USA, And 3.5 million people in Guatel=mala depend on these remittances. Any appreciation of the US dollar cushions the decine in colume of remittances. Ecuador has a dollarized economy and has been hit hard. That is because it has alarge population in SPain, and Spain is one of the hardest hit economies, and the euro has declining versus the dollar. Low skilled professions in which these people work, in construction, manufacturing, hotels and restaurants, are oftent he hardest hit. Migrants are stayingput in these countries even turning doen incentives like those in Spain of lump sum payments to return home, and tend to be resilient, working odd jobs and longer hours and making do with less to tide over abad period....

LyrArc Article Gist
The credit lending boom in Brazil is leading to rising levels of household indebtedness and credit card abuses. In Brazil and Chile consumer lending regulations are lax. Credit card interest rates in Brazil can be as shockingly high as 220% annually. The household debt to income levels were 70% at the end of 2010 in Chile, according to the Central Bank. In Brazil this ratio is 40%, according to LCA Consultores. Consumer appliance and electronics stores such as La Polar and Casa Bahias are lightly regulated and offer lower priced products to a new class of consumers in lower classes that have no experience with consumer credit. La Polar is under investigation in Chile for increasing rates and changing the terms on loans unilaterally for 418,000 customers. In Brazil the federal prosecutors office is charging banks such as Itau, HSBC, and Santander with $300 million of illegal bank charges on clients from 2008 to 2010.

LyrArc Article Gist
Mexico reports 1092 deaths from coronavirus. Mexico has 101,000 cases and 11,729 deaths, a death rate of over 10% of cases. Brazil passes 600,000 cases only 4 days after passing 500,000.

Germany is implementing a 130 billion euro package to revive the economy. Measures include temporarily reducing VAT from 19% to 16%, giving 300 euro payment for each child. Incentives to buy new cars, and relief for municipalities with high debt are also included. This is on top of 1.1 trillion euro rescue package in March. To fund this effort Germany approved new borrowing and disregarded the deficit rules.

LyrArc Article Gist
Brazil's infrastructure needs include port and road facilities for its agricultural exports and mining industry. Road and rail transport networks for passengers are small considering Brazil's size. The rail network is smaller than that of France and only 12% of the one million mile road network is paved. Brazilian petroleum fund Petrosal will invest in infrastructure needs. Investments are being made to upgrade port facilities by Santos Brazil, and investment in toll roads by CCR, a private-highways company. The government is planning investments in infrastructure to prepare for the World Cup in 2014 and the Olympic Games in 2016.

LyrArc Article Gist
Brazil's GDP increased by 0.34% for the 4th quarter of 2011 from the prior quarter. For the full year GDP increased by 2.7%, with an actual decline in GDP for the third quarter of 0.1%. The GDP growth for 2010 was 7.5%. The slowing economic growth reflects an overvalued currency, weak manufacturing competitiveness, and inflation. Brazil's growth will be lower than potential say analysts, and it will be tough to get to even 3.5% growth in 2012-2013. A similiar process is seen in other emerging markets. China's premier Wen Biao announced lower growth targets of 7.5% and a shift in priorities recently. And India's growth rate for 4th quarter, 2011, was 6.1%.

LyrArc Article Gist
Brazil shifts stance on the appreciation of its currency, the Real, as it approaches $1.60 to the dollar in April 2011. With inflation at 6.3% in March 2011, Finance Minister Mantega is seeing the benefits of a stronger currency in reducing the cost of imported goods. Brazil's currency, the Real, is appreciating as foreign money pours into Brazil because of growth prospects and because of the overnight interest rates of 11.75%. This will limit the use of capital controls that Mantega has used in the past. Since October Brazil triple taxes on foreign investment in local bonds.

LyrArc Article Gist
WSJ's John Lyons interviews Brazil's finance minister Guido Mantega in May 2012. Mantega says Brazil is following a"developmental economics" model for growth, which is more appropriate for Brazil. This includes credit expansion and loans to the auto industry by state owned bank Banco de Brasil in 2012, in an effort to revive growth. He sees the 20% decline in the value of the Brazilian currency, the real, helping increase exports.

LyrArc Article Gist
The IMF in its 2012-2013 Global Economic Outlook Report presented at its annual meeting in October 2012 estimates global economic growth of 3.3% in 2012 and 3.6% in 2013. This is a drop of 0.2% for 2012 and 0.3% for 2013 from its earlier forecast in July 2012. Under the IMF definition the global economy GDP does not have to decline for a recession. Advanced economies growth estimate is 1.3% in 2012 and 1.5% in 2013. Emerging market economies growth estimate is of 5.3% in 2012 and improving to 5.6% in 2013. Specifically for the eurozone growth estimate is decline of 0.4% in 2012 and 0.2% growth in 2013. U.S. growth is estimated at 2.2% for 2012. China's growth rate is estimated at 7.8% in 2012 with a growth uptick to 8.2% in 2013 as a much smaller stimulus than the one in 2009 kicks in. This will help commodity exporters like Brazil, Australia, and Canada. Two surprises are Brazil's growth with a significant improvement to 4% in 2013 from 1.5% in 2012 because of sharp interest rate cuts and improving demand from China. The other is India which is expected to show a significant slowdown with a growth estimate of 4.9% as the government faces what the Kelkar committee report calls "a perfect storm" of a large current account deficit and a budget deficit, and failure to attract foreign investment. Growth in Japan is expected to slow to 1.2% in 2013 from 2.2% in 2012 as the government imposes a sales tax increase to reduce its deficit. ...

LyrArc Article Gist
Goldstein at the Energy Policy Research Foundation sees a moderation in demand for oil holding the increase to less than 1 million barrels a day. Goldstein sees improvements in crude oil supply, spare refining capacity,and product inventories which should help moderate prices. A lot depends on how the slowdown in the US affects Russia, India, China and Brazil. China's export based economy is likely to be affected and India and Russia to a lesser extent. Already the stock markets worldwide have come down in synchronized fashion in January 2007 leading to action by the Federal Reserve in the USA. There is likely to be a slowing down worldwide with Europe and India and Russia doing better than the USA. The USA may already be in recession. On the supply side the investments in Saudi Arabia and other places in OPEC and production increase in Russia should lead to supply increase of 2.5 million barrels a day according to analysts. At these supply and demand levels prices could range from $65 to $80, with a consensus of $80 under present conditions. There is a possibility of it going down to the $60 range if global economic conditions get worse and consequently demand decreases more. A price in the $60 range will still be needed to increase the incentives of exploration and production of new oil sources and to pay the higher costs of exploration and drilling for oil, especially in remote difficult locations like Russian Siberia and in deep sea offshore locations....

LyrArc Article Gist
Government GDP figures show the GDP shrank by 1.8% in the third quarter of 2016 compared to the same period in 2015, the first such contraction in the economy since 2009. Household consumption was down 3.2%. The sharp decline in the value of the lira by 20% in 2016 makes imports costlier, in an economy dependent on consumption spending and tourism for higher GDP growth. Political uncertainty with instability in Turkey following a crackdown on opposition and media also leads to decline in foreign investment and investment by domestic firms.

LyrArc Article Gist
Brazil's growth in 2011 is expected to come in at 3%, much lower than expected. This is a sharp decline from 7% growth in 2010. A modest stimulus of $1.5 billion through tax cuts was announced by the Brazilian government. Brazil's central bank made three successive cuts in interest rates to counteract the slowdown in the economy.