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The One Country That Might Avoid Recession Is...
By Tim Padgett and Andrew Downie / Sao Paulo for Time Magazine
Brazil is no stranger to economic crises. In the 1970s and '80s, Latin America's economic giant turned financial mismanagement into an art form. The current global turmoil has not left Brazil unscathed: stock prices, exports and growth are all down. But something interesting is at work this time around, and the best place to see it is in one of Brazil's favelas, the vast urban slums that are desperate even in the best of times. Walk through São Paulo's sprawling Brasilândia, though, and you don't sense the relentless doom and gloom gripping other cities in the world. Take Efigênia Francisca da Silva, who exudes middle-class expectations and remains positive despite the tsunami of bad news. In past crises, Brazil was usually the nation in need of the largest life preserver. If it wasn't drowning under fiscal recklessness, it was being held under by draconian austerity plans. Brazil, the old joke goes, is the country of the future — and always will be. Now, in the middle of the worst global downturn for decades, Brazil could finally be the country of the moment. According to a recent study by the Paris-based Organization for Economic Cooperation & Development (OECD), Brazil may be the only one of 34 major economies that avoids recession in 2009. While the U.S. debates whether to nationalize its crippled banks, Brazil's remain comparatively sound. Oil companies worldwide are slashing investment, but Brazil's state-run Petrobras is going ahead with a four-year, $174 billion expansion plan. Brazil still faces huge challenges; its education system is dysfunctional, its political system squalid, corruption endemic. But consider: 53% of Brazil's 190 million people now occupy the middle class, up from 42% in 2002. This increased social mobility happened at the same time the country's main stock index soared some 480% before last fall's downturn. [President Luiz Inácio Lula da Silva] seems to have cracked Latin America's chronic conundrum: how to expand underachieving economies while reducing epic inequality.... >>>>Go to Full Story >>>
Chilean Industrial Production Declines Most in Decade
Chilean industrial production fell the most since 1999 in January as durable goods, textiles and mining plunged. Output declined 8.9 percent in January from the same month a year earlier, the National Statistics Institute said today in statement distributed in Santiago. The drop was nearly twice the median forecast of a 4.8 percent decline in a Bloomberg survey of economists. Production last fell more in July 1999. The economy is slowing as demand for Chilean exports dries up. The price of copper, Chile’s biggest export fell 63 percent in the last six months.
Brazil posts a win; Argentina downgraded (MSCI yanks Argentine stock market to 'frontier status')
Brazilian equities ticked up Thursday, with federally run Banco do Brasil registering gains after the company's quarterly earnings surpassed analysts' expectations. In Argentina, a rally in oil prices helped equities remain higher after a key entity downgraded the country from emerging-market status, a move that was widely expected but underscored the country's fragile financial situation. Earlier Thursday, MSCI Barra said it will downgrade Argentina to frontier-market status from emerging-market status in its indexes, citing the country's "continued restrictions to in- and outflows of capital" in the equity market. Frontier markets, which include Sri Lanka, Vietnam, Lebanon and Kazakhstan, are smaller and considered riskier than emerging markets. The change will take place in May.