The PNAD (Pesquisa Nacional por Amostra de Domicílios) just revealed that the average family income in Brazil went up from R$ 2.055 to 2.085 from 2008 to 2009.
Noteworthy is that the income from the lower class works went up faster (5,9%) then the upper middle class and upper class (which even had a slight decrease in income).

As a result, the Brazilian Gini index further decreased from 0,521 in 2008 tot 0,518 in 2009.  Brazil used to be the most unequal country in the world (highest Gini Index).  In 2008 South Africa took over the position of the most unequal country in the world, with a Gini index of over 0,67.  Brazil itself has made tremendous progress and now sits in the league of countries like Mexico, Costa Rica and not all that far off from The United States with its increasing Gini index of 0,45 in 2007 .  Economists pointed out in 2005-2006 that the United States is becoming a country with bigger inequality then Mexico for example.

Aslo noteworthy is that the state of Rio de Janeiro feels the least the effects of the crisis.  The avarege wage in the Rio de Janeiro state went up with 6,4% between 2008 and 2009 and the unemployment further decreased from 9,6% in 2008 tot 9,2% in 2009.

Tags: gini brazil, gini united states, wage increase brazil

The Economist published a feature issue last week on the rise of Latin America, heavily focusing on Brazil and Mexico. They used a controversial image with the American continent turned upside down.

Some excellent articles from the issue:

Nobody’s backyard

So near and yet so far

A Latin American decade?

Venezuela now holds the world’s second biggest  proved oil reserves, as reported in the 2010 edition of Statistical Review of World Energy.    Venezuela overtook the Gulf producers Iran, Iraq and Kuwait in terms of proven reserves.  It appears now that Dilma Rousseff will win the Octover elections in Brazil; don’t forget that she was previously minister of energy; the plans for the Grand Gasoducto do Sur will come on the table again.

Also Brazil has now even more oil than was previously imagined in 2009.  The Tupi fields (30 billion barrels of oil) made then headlines, but the newly explored Libra oil fields represents a wopping extra reserve of 8 billion barrels of oil, possibly making it the second-largest worldwide crude discovery in a decade.  This comes after the find of the Franco fields earlier in May 2010, which represent 5-8 billion barrels of oil.  The most recent find (Libra fields) will be the first one that will go in auction in the first half of 2011.

Below en interesting video in English that debates on the Brazilian oil; of course with a layer of PR to try to influence the debate in the US interest (see their BP catastrophy).

Tags: brazil oil, libra fields, tupi field

Another excellent post from Geert Noels in which he classifies countries based on their 2010 total gross public debt and fiscal deficit.
I added Brazil to the chart.
Brazil has a 3,35% fiscal deficit and a 61% gross public debt/GDP which ranks Brasil just outside of the Maastricht norm (to which nearly none European country applies to as the article of Noels points out).

Let’s also not forget Brazil’s 253 billion in foreign reserves, which brings Brazil’s net debt (total debt minus international reserves and other government cash) to 42,2%.  Nevertheless, I would have liked to see Brazil’s gross public debt sit below 50%, ranking the country amongst the absolute top performers like Korea and Switzerland.  The Brazilian treasury has all the power to be more aggressive in the debt profile; but like BNP Paribas’ Lintz pointed out: it’s an election year.

It goes without saying that Dilma Rousseff will be elected president in October.  Planninng Minister Paulo Bernardo revealed that a net debt to GDP of 30% is a target for 2014 and clearly, Dilma underwrites to understand the importance of this in many interviews.  This would mean her government would have to keep a primary budget surplus of 3,3% of GDP for the next 4 year.  Seems challenging for me.  If gross debt could fall below 55% and net debt below 38% by 2014, this would already be a major achievement.

Let’s keep a close eye to economical brains around Dilma.  I’d absolutely vote for Henrique Meirelles to remain president of the central bank.  He’ll be in the cabinet of Rousseff, yet it’s unclear who will be the next president of the Brasilian central bank. Antonio Paloci is also on the list, Pimco is rightfully a fan of him (despite the media-hunt that led to his resignation in 2002, read the 2007 book “Sobre Formigas e Cigarras” if you want to know all on this event).

Last week Dilma shot down media reports that she was planning to cut spending heavily and lower the government inflation target.  But that doesn’t let us look in her cards.  Nobody wins an election by saying the will cut spending, so her denials are totally expected.  Yet, let’s see what she will do at the beginning of her government.
If she wins the election, Rousseff’s choice of cabinet ministers will be the best early sign of whether she intends to run a leaner government.

Tags: Antonio Paloci, dilma rousseff, inflation target Brazil, Paulo Bernardo

Belgium economist Geert Noels highlights in his recent article that Belgium is now riskier than Brazil when one considers trhe spreads on bonds and CDS-premiums.

As below chart highlights, the Brazilian CDS premiums remained stable at 150 while the Belgian premiums almost trippled from 48 to 153 in the last year.
Noels concludes “We -Belgians- are now seen as more risky than Brazil.  And that is not so irrational if you compare both countries.”

Mr. Noels pointed publicized this report last week on the devastating effects of the industrial sector which is completely melting away in Belgium; leaving the country in a crippled position with ever increasing trade deficits.

Tags: CDS premium, geert noels