Political economy "double curse" Brazil
accelerate toward the cliff?
"Our goal is to be by the end of 2016 will lock in 4.5% of the target inflation."This is BrazilThe central bankGovernor general than he (AlexandreTombini) in 2015 at the beginning of the winter davos BBS to accept the "first financial daily" reporter in an interview with words.However, it seems that the economic situation in Brazil is very cruel, on December 22, international credit rating agency moody's said or by Brazil's rating to junk.Released this year, in addition, Brazil's annual inflation rate of 10.48% in November, a 12-year high, its currency has accumulated depreciation by 60% against the dollar (2011 - present), has dropped nearly 50% this year.
Brazil's economy in 2016 will go?
Oxford institute for economic research (OE), a senior economist at MarcosCasarin told the "first financial daily" reporter: "four heavy difficulties for Brazil's economy - Brazil's house of representatives announced for President rousseff start impeachment proceedings, finance minister, levy (JoaquimLevy) resign, sovereign credit rating downgrade, crude oil and commodity prices tumbling, enough to make the above several factors accelerating towards the cliff in Brazil
(Brazilisfast - forwardingtowardstheprecipice). However, we still think Brazil can barely get to (muddlethrough) in 2018, but the per capita income will fall back to 2009 levels by the end of 2016, the economic rebound in sight."
In fact, our reporter has repeatedly asked economists in overseas institutions, people from all walks of life all believe that the emerging markets have the ability to get over the federal reserve to raise interest rates, the global economic slowdown, such as challenges, similar to the 1997 financial crisis does not repeat itself, but the possible exception of Brazil, although in the crisis is less likely, but long-term depression (recession) almost nailing on the plate.
Political and economic dilemma "double curse"
Caption: : the Brazilian real reached a record low against the dollar)
On September 21, 2015, the real against the dollar fell 1% to 3.9851, 1994 Brazil use the close since the currency has low.As of December 22, Beijing time backs "first financial daily" reporters time, real further against the dollar fell to 4.0117, the earlier period is more a three-month low.Societe generale(17.19, 0.01, 0.06%) had expected, if political crisis intensified, the real against the dollar may fall to further 5 levels.
Brazilian politics indeed accelerating deterioration, economy is being serious.It is understood that since this year, Brazil's economy for three consecutive quarters of decline, this year could shrink by nearly 4%.In addition, petrobras corruption continued fermentation, the ruling party has a lot of politicians and government officials involved in.The latest polls show that, at present the rousseff are not 70% satisfied with the ruling.On December 2, rousseff impeachment proceedings begin, Brazil has since news continuously.
On December 16, one of the three major rating agencies fitch has downgraded the sovereign credit rating to junk, Brazil led by s&p companies already in September, moody's or will follow suit.Two days later, Brazil's finance minister hawks resignation levy, leftist President rousseff appointed barbosa (NelsonBarbosa) as the agent for the finance minister.
Fitch said, Brazil's unsustainable debt, especially under the current political leadership structure.Since the beginning of the year, the government policy is to "kick jar street" (kickthecandowntheroad) put-off attitude, plus the use of levy "market-friendly" image to promises austerity (not actually implement).Previously, levy is trying to raise taxes and government spending cuts, but helpless intensive shelling by congress, dilma rousseff, was led by the left-wing Labour party and its government insiders.Levy's failure is denied the possibility of austerity bill.
Caption: Brazil's debt will far above a reasonable level. Note: the dashed for reasonable debt levels and the blue line to the actual situation)
However, the new barbosa credit qualification is far inferior to levy.MarcosCasarin, said the biggest problem is that Brazil's ruling party how long it will take to realize that the situation has been difficult to last?"Since 2011, the real exchange rate has depreciated by 60% against the dollar, the price (in dollar terms) have fallen back to 2005 levels, inflation, unemployment and the budget deficit almost double-digit. Everything just means - Brazil's economy will accelerate toward the cliff."
"Ally McBeal" seemed to herald the December 2016 Brazil will be more calm."Brazil's nightmare is still continued. The world is divided into three categories, with the consumer, such as the United States), producers (e.g., China) and resources (e.g., Brazil). The current consuming countries in structural transformation, producer with adjustment, must not be resource countries time, commodities slump is exacerbated by the momentum."China merchants securitiesFixed income research at bin-bin sun, told China business news reporter.
"Bankrupt" in South Africa or follow
Than had previously been bad-mouthing most frequently in Malaysia, and Brazil for their continent's biggest economy, South Africa seems a distress.Like Brazil, South Africa this year also are experiencing a slowdown and credit rating downgrade.
"Emerging markets are under pressure... as of last week, Brazil, Russia and Turkey are worrying, South Africa and joined the club," standard bank, icbc said in a report on December 14th, "South Africa will be the second Brazil? This idea is very scary."
As of December, the standard & poor's and fitch to South Africa's credit rating is only higher than junk level "BBB -," moody's is "Baa2 debt" class is given, and two levels higher than junk.
According to foreign media quoted private Banks brown brothers Harriman (BBH) analysts and market research firm Renaissance capital (RenaissanceCapital) emerging market experts predict, South Africa's sovereign credit rating will fall further in 2016, make its financing costs, to crack down on the country's economy."We reiterate that we have been, the country's rating cut to near junk, may now be sooner rather than later. We think that a downgrade is inevitable."BBH said in a report.
In addition, Brazil's political risk also in South Africa.Barclays analyst said recently, developments surprising, it has caused to remain as South Africa's President Jacob zuma is even, or political solution to the left to find the right questions.
Slump in global commodity prices tumbled to South Africa's economy, its usefulness the Baltic dry index (BDI) days a record
low.According to official preliminary estimate in South Africa, South Africa's economy shrank 1.3% in the second quarter, third quarter increased by only 0.7%.South Africa, the bureau said oil industries such as high output driven manufacturing growth, demand for coal and diamond, platinum production reduce affected the performance of mining.Barclays analysts expect the country's economy will grow by 1.4% this year, next year will increase by 1.8%.A barrage of political mistakes, combined with the continuous economic downturn all make people to dilma rousseff and zuma ability to boost its economy has been questioned.