Rural poverty in Brazil

Although the country is an important agricultural and industrial power, with the strongest economy in Latin America, poverty is widespread in Brazil. Despite recent improvements in income distribution, the issues of income inequality and social exclusion remain at the root of rural poverty. Brazil is a middle-income country and is rich in natural resources, but poverty levels and human development indicators in poor rural areas are comparable to those in the poorest countries of Latin America. In the country as a whole, about 35 percent of the population lives in poverty, on less than two dollars a day. But in Brazil’s rural areas poverty affects about 51 percent of the population.
Since approximately 19 percent of the total population, or about 36 million people, live in rural areas, this means that Brazil has about 18 million poor rural people, the largest number in the Western Hemisphere. And Brazil’s North-East region has the single largest concentration of rural poverty in Latin America.
The poorest and most vulnerable groups among Brazil's rural poor people are women, young people and indigenous peoples. And child labor is still common among poor households in Brazil.
Lack of access to formal education and skills training is another major cause of rural poverty. In recent years the government has invested large amounts in resources to broaden the scope of technical assistance services and facilitate access to them, especially for poor rural people.

http://www.ruralpovertyportal.org/web/guest/country/home/tags/brazil#

Brazil and India add to pressure on China

In my research I have found this article that indicates that China is facing growing pressure from other developing countries to begin appreciating its currency, providing unexpected allies for the US in the diplomatic tussle over Beijing’s exchange rate policy.
The most forceful statements about case for a stronger Chinese currency it is said comes from the Indian and Brazilian central bank presidents.
The strongest public pressure comes from the US, but still a number of developing economies say that China's dollar peg has imposed costs on their economies.
The head of the Brazilian central bank thinks that a stronger Chinese currency was “absolutely critical for the equilibrium of the world economy”. He said there were “some distortions in world markets, one of them is a lack of growth and another is China”.
The governor of the Reserve Bank of India said that an undervalued renminbi was creating problems for countries, including India.
The prime minister of Singapore, added his country’s voice to the debate last week, saying it was “in China’s own interests” with the financial crisis over to have a more flexible exchange rate.
Some in China have fended off US pressure for a stronger currency, describing it as a distraction from the real causes of the financial crisis. However, criticism from developing countries is not so easy to bat away. “If the rich and emerging economies are united in asking China to revalue, it would be harder to dismiss the request as an example of superpower arrogance,” said Sebastian Mallaby at the Council on Foreign Relations.
The impact of China’s currency policy on other developing countries is not clear-cut, however. Although a number have seen their currencies appreciate sharply over the past year, putting pressure on their exports and exposing them to fiercer competition from China, the economic recovery in China has also provided a boost, especially for its neighbours in Asia as well as commodity-producing countries such as Brazil.

http://www.ft.com/cms/s/0/1d692fd2-4d1c-11df-baf3-00144feab49a.html

Brazil's inflation points to higher rate

According to Andre Perfeito, an economist at Gradual Investimentos, Brazil’s broadest measure of inflation rose in March at its second-fastest pace in 17 months, reinforcing the “urgent” need for the central bank to start raising rates in April to put a lid on consumer prices.

Consumer, wholesale and construction prices, as measured by the IGP-M price index, jumped 0.94 percent this month, after rising 1.18 percent last month, the Getulio Vargas Foundation said in a report posted on its Web site. The gain was in line with the median 0.93 percent forecast in a Bloomberg survey of 28 economists. The index jumped 1.94 percent from a year ago.

Accelerating inflation has fueled expectations the central bank will raise borrowing costs in Latin America’s biggest economy next month for the first time since September 2008. Policy makers, after leaving the benchmark Selic rate unchanged at 8.75 percent on March 17, said they see prices rising “markedly” faster than their 4.5 percent target this year.

Perfeito says that, “Today’s figure shows it’s urgent that the central bank start tightening monetary policy.”

The yield on the interest rate future contract due in January 2011, the most traded on the Sao Paulo BM&F exchange, was unchanged at 10.36 percent at 10:15 a.m. New York time.

Analysts predict consumer prices will rise 5.16 percent this year, exceeding the midpoint of policy makers’ target, according to the median forecast in a central bank survey published yesterday. The same survey showed economists expect the central bank to raise the benchmark interest rate to 9.25 percent in April.

Worsening Outlook

“Today’s reading adds to doubts on why policy makers kept the rate unchanged at the previous meeting -- until the next one takes place, the inflation outlook will continue to worsen,” Perfeito said.

The central bank targets inflation of 4.5 percent, plus or minus two percentage points.

Wholesale prices rose 1.07 percent in March compared with 1.42 percent in February, the Getulio Vargas foundation report said. Consumer prices rose 0.83 percent in the month, down from 0.88 percent in February.

Source: businessweek.com
Publication date: 3/31/2010
http://www.freshplaza.com/news_detail.asp?id=61311

Employment crisis over

According to the Brazilian Minister of Labor and Employment, Carlos Lupi, the effects of the economic recession on employment in Brazil have already been overcome.
The worst impact of the global financial crisis on Brazil's labor market occurred in December of 2008, with the net loss of 655,000 formal sector jobs. Effects had been felt since October, putting an end to a period of strong growth in formal employment that began in 2004.
December is usually a month with a lot of dismissals as temporary work contracts, particularly in sales during the year-end holiday period, expire. But in December 2008 job losses were more than double those of previous years.

There was still a net employment loss in January, but it was much smaller at 102,000 jobs, and in February there were 9,000 more jobs created than lost, a small net gain indicating a turning point in the trend, which was accentuated in March, figures for which are not yet complete, Lupi said.

As well as the figures showing the trend, the fall in applications for unemployment insurance and the hiring of workers in sectors like construction, education, health and other services demonstrate that "the crisis is over" in the labor market, the minister said.

However, Brazilian industry is still undergoing serious consequences from the global crisis. Steel production in the first two months of this year was down by 42.4 percent. The recovery of mining, steel and other sectors that depend heavily on exports is being delayed because the stockpiles of excess production accumulated over the last several months will only be used up over the months to come, depending on external markets. Meanwhile, production remains low.

A similar dynamic was seen in the automotive industry, which was hit hard by the sharp restriction of credit in the last quarter of 2008. The government cut sales taxes on vehicles, which allowed rapid recovery of sales and production.

Brazil's domestic market, strengthened by real increases in wages and a fall in inflation, was a key factor in mitigating the effects of the crisis, as was the devaluation of the national currency, the real, against the dollar, another effect of the depression.

Brazil is reacting differently to the global recession because of its internal demand and its relatively low dependence on international trade. Increasing the minimum wage in real terms, a policy adopted by the government of President Luiz Inácio Lula da Silva since it took office in 2002, and means that the food sector is relatively unaffected.

Lupi believes that: "The crisis has not affected, and will not affect, the base of the social pyramid," partly because the low degree of inflation due to the crisis has made food cheaper.

On the other hand, the fall in international prices of agricultural commodities was compensated by the depreciation of the real, so that farmers maintained their incomes in national currency, the minister said. The same was true of the footwear industry, which dismissed a large number of workers in 2008, but recovered international competitiveness thanks to the devaluation.

At the present moment, the employment situation in Brazil is overcoming the brief interruption in the strong growth it has shown over recent years, but the minister acknowledged there is a serious structural problem in the national labor market: the enormous job instability.

The net gain of 1.45 million jobs generated last year is the result of nearly 15.5 million hiring and 14 million firings, the minister said. Over one-third of the total number of people in formal employment loses their jobs each year, indicating the large proportion of temporary jobs.

The minister also concludes that another negative factor is the lack of education and training. In 2008, close to one million jobs were not filled because there were no qualified applicants.


http://ipsnews.net/news.asp?idnews=46499

ITAIPU

Recognized by the American Society of Civil Engineers as one of the "Seven Wonders of the Modern World", the Itaipu Dam is one of the largest hydroelectric power plants in the world. Located at the upper region of the Parana River where the borders of Brazil and Paraguay meet, the dam is a joint venture of both governments.

Having more power than 10 nuclear power stations it supplies the second largest city on the planet with zero-emission electricity since 1984. In 2008, the Itaipu Dam broke it's generating record by producing 94.68 billion kilowatts of power. An amount that supplied Brazil with almost 20 percent of the country's energy and around 90 percent of the energy used in Paraguay.

The water intake of one single 75 TWh of electricity and avoids 67.5 million tons of carbon-dioxide emissions - compared to coal power plants.

The final cost of the ITAIPU amounts to US $20 billion, 50% of this value are direct investments and balance financial charges.

Since 1991, over nine million visitors have traveled from 162 countries around the world to visit the Itaipu Dam.

Brazil may break US patents on films, music, drugs

Brazil says it may let local companies break U.S. patents on products including movies, music, pharmaceutical products and chemicals.
The World Trade Organization says Brazil can take punitive action because the United States has failed to get rid of illegal subsidies provided to American cotton farmers.
The list of products targeted for patent breaks was released Monday in the Brazil's official gazette.

Brazil last week announced $591 million in possible sanctions against other U.S. products through higher tariffs. The WTO authorized Brazil a total of $829 million in sanctions.
Brazilian and U.S. officials say they will try to negotiate a deal so the sanctions are not imposed.

Deforestation problem in Brazil

In many tropical countries, the majority of deforestation results from the actions of poor subsistence cultivators. However, in Brazil only about one-third of recent deforestation can be linked to "shifted" cultivators. Historically a large portion of deforestation in Brazil can be attributed to land clearing for pastureland by commercial and speculative interest, misguided government policies, inappropriate World Bank projects, and commercial exploitation of forest resources.



The Brazilian deforestation is strongly correlated to the economic health of the country: the decline in deforestation from 1988-1991 nicely matched the economic slowdown during the same period, while the rocketing rate of deforestation from 1993-1998 paralleled Brazil's period of rapid economic growth. During lean times, ranchers and developers do not have the cash to rapidly expand their pastureland and operations, while the government lacks funds to sponsor highways and colonization programs and grant tax breaks and subsidies to forest exploiters.



Sometimes, especially during periods of high inflation, land is simply cleared for investment purposes. When pastureland prices exceed forest land prices, forest clearing is a good hedge against inflation.


Such favorable taxation policies, combined with government subsidized agriculture and colonization programs, encourage the destruction of the Amazon. The practice of low taxes on income derived from agriculture and tax rates that favor pasture over forest overvalues agriculture and pastureland and makes it profitable to convert natural forest for these purposes when it normally would not be so.