Defining True Sustainability

Suzano, one of Latin America’s largest paper manufacturers, has issued $1 billion in sustainability-linked bonds that expire in 2032, sources said on Monday. According to market information, the operation yeld was 3.28%.

In this issuing, Suzano commits to reduce the intensity of industrial water withdrawal by 30% by 2026. It also commits to having more women in leadership positions by 2025. If the goals are not met, the penalty on the rate will be 12.5 basis points per year.

Suzano will use the funds for debt payment and also to rebuy other bonds which expire in 2024. The operation involved BNP Paribas, BofA, J. P. Morgan, Mizuho, Rabo Securities and Scotiabank.

Source: Valor international

Warehouse Management System - be one solutions Brazil

Banco do Brasil and the New Development Bank (NDB), the development bank of the BRICS (group formed by Brazil, Russia, India, China and South Africa), signed on Monday a letter of understanding to finance the expansion of warehousing in the country. The expectation is to offer up to R$1.5 billion for the construction and expansion of silos and warehouses.

Loans can be repaid in 18 years. “Banco do Brasil is seeking resources abroad to further support Brazilian agribusiness,” the bank’s CEO, Fausto Ribeiro, said.

Marcos Troyjo, who chairs the NDB, says the agreement will be an additional tool for sustainable development. “We can provide essential support for our country’s agribusiness with infrastructure, roads, ports, silos, warehouses, irrigation, vast opportunities from gates to the port,” he said during the partnership announcement ceremony.

At the ceremony, Banco do Brasil confirmed that it will offer R$135 billion in farm loans in the 2021/22 season, up 20from the season that comes to an end this week.

Economy Minister Paulo Guedes said that the “Brazilian vocation to provide the world with food is unavoidable” and that, during the pandemic, the country demonstrated this vocation. “For the first time, agribusiness has passed the manufacturing industry itself,” he said.

According to Mr. Guedes, the agreement between Banco do Brasil and the BRICS bank can go beyond ports, with operations to finance short-sea shipping and other infrastructure operations related to agribusiness. Marcos Troyjo said the letter of understanding also includes foreign exchange, bond issuance and derivative investments.

The NDB was created in 2014. In its first five years, the bank lent Brazil $700 million, according to Mr. Guedes. Since 2019, he said, loans have totaled nearly $5 billion.

For the minister, agribusiness challenged “the low quality of economic policies” and ratified its competitiveness – with support, too, from the Banco do Brasil, a state-run bank. “And I say this even often complaining about things that have happened in the past.”

“Our agricultural financing was based on money issuance. At the end of the military government, inflation was rising on top of the theory that we would give more credit to farmers and food would get cheap,” said Mr. Guedes. “And, in fact, food was getting more expensive the whole time and inflation, going up.” On Friday, the Brazilian Institute of Geography and Statistics (IBGE) reported that the Extended Consumer Price Index 15 (IPCA-15), considered a preview of the country’s official inflation, rose 0.83%, or 8.13% in 12 months. In the food and beverage group, the increase in 12 months reaches 12.13%.

Source: Valor international

After many people had to leave de job market in 2020, the workforce is still below the pre-pandemic levels. However, a portion of those who became unemployed started to search for a job position again in the first quarter. This movement tends to intensify in the coming months, which should keep the unemployment rate at a high level, according to the Applied Economics Research Institute (Ipea).

In Ipea’s second-quarter Economic Outlook, released Monday, economists Maria Andreia Parente Lameiras, Carlos Henrique Corseuil and Lauro Ramos note that the recent increase in the unemployment numbers — which reached 15.2 million people in the three months ended in March, or 14.7% of the workforce —has been influenced by the return of people who were inactive to the market.

From January to March, Ms. Lameiras, Mr. Corseuil and Mr. Ramos say, the economically active population — which includes employed people and people in search of an occupation — increased by 567,000, according to data from the Continuous National Household Sample Survey (Pnad), conducted by the Brazilian Institute of Geography and Statistics (IBGE). The April survey will be published this Wednesday.

Despite the advance, the researchers highlight that the workforce is still 4.4% below the pre-pandemic level of 105.1 million, recorded in the first quarter of 2020. In the same period of 2021, this number was 100.5 million.

“For the coming months, its expected that this movement of labor force reorganization will intensify — considering that the development of vaccination, combined with the stronger resumption of economic activity and the adoption of a less comprehensive and less valuable emergency aid, will contribute to the return to the labor market of a portion of the population that had migrated to inactivity”, the economists point out.

Thus, they assess, even if the employed population increases, this rise should not be enough to reduce the unemployment rate. In the first quarter, the total number of people employed in the country rose by only 17,000. Compared to the first quarter of 2020, there was a decrease of 7.1%, to 85.7 million.

If the labor force had already resumed its annual growth rate to levels like those seen in the months before the pandemic, of about 1%, the unemployment rate would have remained at 19.4% in the March mobile quarter, Ipea researchers estimate — 4.7 points above the percentage recorded.

In the 12 months ended in March, economists calculate that the contingent of working-age people who were out of the workforce because of discouragement jumped from 4.8 million to nearly 6 million, a 25% high. In relation to the total population of working age, the share of the discouraged people advanced to 3.4% from January to March from 2.8% in the same period last year.

In the first quarter of 2016, 40.9% of adults who were outside the economically active population said they were discouraged, a share that increased to 43.4% in the same period this year. On the other hand, the share of those who were inactive for personal reasons fell to 26.3% from 34.2%, and that of those who left the market to devote themselves only to studies decreased to 8.4% from 11.4% on the same basis of comparison.

Ipea also points out that people who declare themselves underemployed — that is, who are employed, but would like and could work more — reached 8.2% of the total employed people in the first quarter of 2021, a point above the first quarter of 2020. The combined unemployment and underemployment rate reached 21.7% in the first quarter of the year, the highest figure in the continuous Pnad series, which began in 2012.

“In addition to the recomposition of the workforce, the high level of underemployed can also act as a limiting factor to the fall in unemployment, considering that, before opening a new job post, there is the possibility of extending the working day of already occupied individuals”, say Ms. Lameiras, Mr. Corseuil and Mr. Ramos. According to them, the increase in unemployment, underutilization of the labor force and discouragement corroborate the view that the Brazilian labor market continues to deteriorate.

Source: Valor international

Comprar Ações da BRF (BRFS3) Hoje Vale a Pena?

BRF returned to the spotlight not only because Marfrig recently became its largest shareholder. The owner of Sadia and Perdigão brands is also surprising analysts with a fast pace of investment.

In just one week, BRF invested about R$1 billion to take over the owners of pet food brands Biofresh and Guabi Natural, grabbing 10% of the Brazilian market – a fat-margin battleground disputed by Mars (Royal Canin), Nestlé Purina and Premier.

When BRF released the first-quarter earnings report on May 13, the meatpacker’s executives were asked more than once about how difficult it would be to achieve a capital expenditure compatible with Visão 2030, the 10-year strategic plan that provides for investments of R$18 billion by 2023. In one decade, the goal is to invest R$65 billion, which is expected to help revenues reach R$100 billion.

Analysts’ skepticism was based on BRF’s leverage ratio, which reached 2.96 times adjusted EBITDA on March 31. Although liquidity is not a problem, as the average debt term is nine years, the company itself has defined a 3 times ratio as its prudent limit.

Analysts predicted R$4 billion to R$5 billion for capex to fit the company’s 10-year plan. An already high debt ratio and the strong pressure of grains on the margins of chicken meat could hinder capex acceleration as projected by the group, they say.

As BRF’s capex totaled R$737 million in the first quarter, up 47% year over year, the owner of Sadia would have to speed up even more to reach R$4 billion, Itaú BBA’s André Hachem says. Leandro Fontanesi, with Bradesco BBI, made a similar point in the call, and Credit Suisse’s Victor Saragiotto cited the issue in a report.

BRF CEO Lorival Luz and CFO Carlos Moura doubled down on financial discipline to try and convince analysts in the call, but recalled that the stronger dollar – the exchange rate used for trade finished the first quarter at R$5.7 to the dollar – accounted for an important chunk of the higher leverage given the concentration of liabilities in foreign currency. Yet the greenback is losing ground against the Brazilian real, which changes the outlook.

When Mr. Luz talked to analysts back in May, the exchange rate had already fallen to R$5.20 to the dollar– and the fact that it is now below R$5 helps the meatpacker. “Until now, we benefited from the much lower exchange rate,” BRF’s CEO said. But that wasn’t all. Operating cash generation was also a tailwind. “We can speed up or slow down our moves a little, but with the results we have been presenting, we are sticking to our plan.”

BRF’s recent acquisitions suggest that he was right. In an interview with Valor, the executive said that the acquisitions of Mogiana Alimentos (owner of Guabi Natural) and Hercosul (owner of Biofresh) would be possible even without a stronger real. He said BRF would be successful anyway, “regardless of the exchange rate.”

BRF has not yet disclosed the value of the two acquisitions and will only do so when it concludes the operation, in 30 to 45 days. The typical multiples in the feed industry – between 1 and 1.5 times revenues – show that the company will spend about R$1 billion to gain prominence in the pet food market.

Mogiana Alimentos will add R$450 million in revenues to BRF’s pet business, while Hercosul reports more than R$300 million in sales a year. CRG Core Group, an M&A boutique, advised BRF in the acquisition of the two companies.

With the bet in pets, BRF seeks less commoditized markets with higher margins than those usually obtained in the production of chicken and pork in natura. In these two traditional fields of the company, margins only exceed 15% in exceptional moments.

In the world of dogs and cats, especially in the premium category BRF has just entered, 20% margin is a very reasonable level. With the two acquisitions and a 10% share of a market that may reach R$40 billion in the next few years, the challenge now is to integrate Hercosul and Mogiana to BRF’s pet division, which already owns Balance.

The acquisition spree in the pet market is over, but the work of Vladmir Maganhoto, a former CEO of Royal Canin recruited last year by BRF to lead the pet team, is just beginning. The division, which only grossed R$9 million last year, now barks louder.

BRF is worth R$3 billion on the stock exchange.

Source: Valor international

Grupo Equatorial Energia | LinkedIn

In just over three months, Equatorial Energia bought two distribution concessionaires, a solar distributed generation company — E-Nova — and does not intend to stop. The company continues to consider new growth opportunities, even after adding to its portfolio complex assets in Amapá and Rio Grande do Sul and advanced in a new segment of activity.

“We have robust cash reserves, our transmission lines have just become operational and will generate more revenues. Besides, our relationship with the market, with commercial and development banks, allows us to consider it [expansion]. And we have already given very clear sign that we really have interest in sanitation”, said Equatorial’s CEO, Augusto Miranda, at a press conference on Friday, after the group bought the Electricity Company of Amapá (CEA) in a privatization auction.

Equatorial was the sole bidder in the auction of the Amapá State electric utility. With the acquisition, the group takes on another challenging asset, with multimillion liabilities and operational inefficiencies, just a few months after having bought CEEE-D, a Rio Grande do Sul state-run utility company that was also facing a difficult financial situation.

To meet the new challenge, the company is betting on potential synergies with its operations in Pará and also on the knowledge gained from the turnaround experiences in other concessions across the country. Equatorial was one of the groups that took part in the process of selling Eletrobras distributors in 2018, acquiring the companies in Alagoas and Piauí states.

“It is a very important asset. I guarantee that from day 1 we will work hard to ensure quality electricity which will be enough to support the growth of the state [of Amapá]”, said Mr. Miranda. The company also increases its presence in the northern region. “Considering our transmission assets, we are in all regions of Brazil. We have a continental dimension and, now, from North to South.”

Equatorial offered an index of zero for CEA. This means that the group paid the minimum amount of R$50,000 for the utility, assumed billionaire liabilities and did not want to give up the tariff easing of regulatory parameters of operating costs (Personnel, Materials, Services and Others; PMSO) and the definition of the parcels of the Global Reversal Reserve (RGR) loans that will be taken by CEA.

In addition, Equatorial compromised to make a capital increase of R$400 million in the utility, as provided for in the conditions for privatization. For this investiment, it should use its own resources. For future investments in the concession, Equatorial is expected to seek financing from development and regional banks.

The privatization of the Amapá utility ends a years-long effort by the federal government, the Brazilian Development Bank (BNDES) and the Brazilian Electricity Regulatory Agency (Aneel) to give a referral to the electricity distributors that operated under the designation regime, that is, without a concession contract.

“Among the privatizations, the CEA was the one that most challenged us in terms of attracting a concessionaire with investment capacity, and by the characteristics of the region. For the electricity sector, today is of celebration,” said Marisete Pereira, executive secretary of the Ministry of Mines and Energy (MME) on Friday,

BNDES plans to carry out two more privatizations in the electricity sector later this year. In July, there is the plan to auction the power transmission arm of CEEE — Equatorial does not intend to participate in this auction. At the end of the year, CEEE will sell its generation assets.

Simultaneously, the bank continues to prepare the modeling of the capitalization of Eletrobras. According to the president of BNDES, Gustavo Montezano, the works are “going very well”, and the expectation is to make the offer in the market between January and February 2022. “We are working at full steam, our team is fully motivated and engaged. We are confident that we will meet this schedule for the beginning of next year.”

Source: Valor international

Promptis provides smooth landing for new Airbus | World Cement

Airbus, maker of the best-selling commercial jets in history, cemented its leadership in the Brazilian commercial aviation market with the launch of Itapemirim Transportes Aéreos (ITA), the newest local airline. With a 170-aircraft fleet and a 40% market share, the European company supplied the first four aircraft – four A320s – of the company, which scheduled its inaugural flight for next week.

“We are convinced that the Brazilian market will also recover,” Arturo Barreira, Airbus CEO for Latin America and the Caribbean, told Valor. Civil aviation was hit hard by the Covid-19 pandemic around the world and plane makers saw orders dwindle, particularly in the first half of last year.

The executive does not comment on the future plans of the new Brazilian airline. But more orders should come in, especially since ITA planned to reach 50 planes within a year after starting with 10.

In Brazil, the A320 and A330neo families were already used by Azul and Latam – in the latter case, through a partnership that started at the time of TAM Linhas Aéreas. Airbus, with the A320, and Boeing, with the 737, lead the market of narrow-body aircraft typically used for domestic flights. Embraer, the global leader in the market of up to 130 seats, developed the E2 family of commercial jets to compete in this segment.

Airbus expects that global commercial aviation will return in 2023 to the levels seen in 2019, with domestic markets recovering before then. “Brazil will not be left out of this,” Mr. Barreira said, arguing that the country’s infrastructure and size favor air transport. Consequently, the domestic market is large and puts the country at the top of the Latin American ranking in terms of relevance for the European company.

A month ago, the aircraft manufacturer unveiled a new production plan for the A320 family jets, increasing the number of units produced per month to 45 from 40 by the end of this year. The production rate had been reduced to 40 a month from 60 due to the pandemic. “We are optimistic about the effect of vaccination on air traffic”, Mr. Barreira said.

The suspension of the trade battle between the United States and Europe concerning government subsidies granted to Boeing and Airbus is good for the industry as a whole, the executive said, as the dispute impacted air traffic by raising costs.

The armistice between the rivals came after China’s state-owned Comac developed and built the C919, consultants and analysts say. The Chinese commercial jet is expected to fly this year and will compete in the same segment as Airbus’s A320 and Boeing’s 737.

In Mr. Barreira’s view, Comac will not be a global competitor for Airbus or rivals Boeing and Embraer in the short term. “It takes time and investment for a plane maker to go global,” he said. “It will not be an easy path.”

Airbus’s response to the competition remains based on innovation and the continued quest to reduce costs for operators. In September, the European company presented three concepts for its future zero-carbon commercial aircraft, dubbed ZEROe, which will be powered by hydrogen. By testing different technologies and aerodynamic configurations, the ambition is to lead the industry-wide decarbonization push and put into service an aircraft that will use hydrogen as its primary energy source in 2035.

The first concept is a “turbofan” with a capacity of 120 to 200 passengers suitable for transcontinental flights, with a hydrogen-powered gas turbine stored in tanks at the rear of the body. The second concept is a turboprop with a capacity of up to 100 passengers and a regional range. The third concept, a flying wing – in which the wings are fused to the main body of the aircraft – has a capacity of up to 200 passengers and a flying range similar to that of the first concept.

Source: Valor international

Tetra Pak está entre as 10 empresas mais amadas no Brasil - ABIR

Tetra Pak, the world’s largest food packaging company, is testing the payment of financial bonuses to waste pickers and paper makers in order to increase the recycling of carton packages produced in Brazil. Last year, 108,000 tonnes of cartons were recycled, or 43.7% of its total production in the country, more than double the rate recorded five years before. The goal is to accelerate the pace of growth, starting with the implementation of two projects developed locally, which in the future may be replicated in other Latin American markets.

In Brazil, waste pickers give preference to aluminum and cardboard because buyers are a sure thing. Tetra Pak wants to woo them to UHT packaging too and to do so it signed a partnership with the Cataki platform, developed by NGO Pimp my Carroça. The application, which brings waste generators and pickers close together, have included carton packages in the list of materials collected for recycling. Tetra Pak will connect them with the cooperatives that will buy this material.

Tetra Pak will use the application to pay both the waste pickers and the cooperatives a R$0.25 bonus each per kilo of carton packages. “By including the carton packages, the opportunity for income generation for the waste pickers is amplified,” Valéria Michel, Tetra Pak’s head of sustainability for Brazil and the Southern Cone. “However, we realized that it would be necessary to give a financial bonus as a guarantee that the material collected will have a buyer.”

One challenge associated with the collection of post-consumption carton packages, Ms. Michel said, is the mistaken perception that they are not easily recycled because they contain layers of different materials (cardboard, plastic and aluminum). Until a few years ago, in fact, there was no appropriate technology. Today, 100% of the packaging is reused after the materials have been separated. The paper, which represents 75% of the carton package, is reused and the plastic and the aluminum go to the transformation industry, giving rise to boards and roof tiles, among other products.

On another front to encourage the recycling chain, Tetra Pak launched the Long Life Network project, which guarantees a 20% bonus per additional tonne of carton packages collected and recycled. The resources are disbursed by company, which does not disclose the investment forecast to face the subsidy and the bonuses.

The pilot project started in April, with Revita, the largest long life packaging recycler in the country. To the monthly volume of 1,000 tonnes recycled before the program, the company added 150 tonnes a month, an indication that the system has already started to produce results. “We are optimistic about the possibility of scaling up the two projects and getting out of the pilot,” Ms. Michel said.

According to the executive, the proposal with the two projects is to evaluate whether, starting from the financial incentive, packaging recycling grows faster. “The investment is significant, but since the beginning of the process Tetra Pak has been investing a lot in the chain, which already exists and is economically viable,” she said.

Tetra Pak has not set any specific goals for the recycling rate of the packages produced in the country. But, as a mission, the multinational company aims at having “the most sustainable package in the world,” Ms. Michel said. And, as she says, on the route towards this goal, recycling and innovation in materials go hand in hand.

Source: Valor international

Physical Stores Increase Online Sales

The reopening of physical stores accelerated sales in these channels and improved inventory turnover, in a scenario that — for the first time in more than a year — shows greater normality in the retail chain.

Despite the fact that there is still a certain disruption in the deliveries of products by the industry because of the shortage of inputs, the lack of goods fell. This reduced the need for emergency stock on the eve of the start of order placings for products for sale on Black Friday and Christmas. Year-end purchases begin to be made after August.

“We no longer see so much lack of goods, it became something more punctual,” said Jorge Nascimento Junior, president of Eletros, a trade group that represents electronic goods manufacturers. Via, owner of Casas Bahia and Ponto Frio chains, has been resuming more normal levels of industry purchase in this second quarter.

However, even with the change of scenario compared to the beginning of the year, the performance in stores — and the adjustment in inventories — has varied not only by sector, but also among categories of the same segment.

The return of the consumer to purchases in brick-and-mortar stores occurs unevenly, with a direct relation with pent-up demand, which requires a fine adjustment in orders.

Televisions have lost more momentum this year than smartphones, for example, which keeps demand accelerated, according to data from research firm GfK — especially after LG’s exit from the mobile market. GfK shows electronics sales up 26% from January to June 6, below the average for durable goods, at 39%, based on 2020, when physical stores were closed. But computers are up 69%, and cell phones 39%, both also on a high comparison basis.

According to Allied, a distributor of consumer goods and online retailer, until April, the sale of TVs fell 14% in volume – the increase in revenue came from the adjustment of prices in the year. “In the second half, when we should see a stronger movement of total competition, with all segments and products competing with each other after the broader vaccination, we may have more varied performances. It is possible that TV sales suffer more than notebook sales, for example,” Allied CEO Silvio Stagni said.

According to the company, the inventory level today is slightly lower than normal, in part due to adjustments in expectations regarding what was seen in 2020 — when the sale of electronics rose 13.5%, according to a trade survey made by the Brazilian Institute of Geography and Statistics (IBGE). “The market reality is different from what we saw when the pandemic began, but we also have to see if this is not kind of a self-fulfilling prophecy,” he said.

“Everyone has repeated that some segments and categories should slow down, and others with pent-up demand should grow, companies end up organizing for this,” says the CEO of the group, owner of the MobCom site and distributor of 10 million items. He recalls that the orders for Black Friday begin to be placed for the industry two to three months before the event in November, and this interval allows the market to gather more data and define strategies to try and better exploit the date.

Data from companies and research groups show that the rate of acceleration in sales today is stronger in fashion retail and in the service field, such as restaurants, than in the electronics and home appliances market, which has a stronger base of comparison.

This year, from January to April, which includes the first month of a stronger reopening of stores, and the beginning of a greater normality in retail, the sale of electronics advanced 11% (versus 10% in 2020), construction grew 25% (compared with 11% in 2020), but fashion retail stopped falling, according to monthly data from the IBGE survey. Clothing closed the period up 3.6%, the first acceleration since the beginning of the pandemic.

There are retailers that have made adjustments to orders because they came from higher purchase volumes, and others that have not reduced purchases from the durable goods industry. This is because they understand that demand should remain high for all segments, with the return of activities that were stopped.

“We are maintaining the level of purchases of the year, for sale for the next few months, because we do not believe in a slowdown,” said José Domingos, general superintendent at Lojas Cem, with 287 stores in four states. “When other sectors return to normality, such as events and services, which have a mass of workers who stopped shopping and will start consuming again, we expect an accelerated strong demand,” he said.

In the first half, Lojas Cem’s sales grew 34%, on top of the base most affected by the pandemic — the company does not sell online, only in physical stores.

Mr. Domingos says that the lack of components that affected the global chain led the industry to deliver more goods to the largest purchasing chains, which currently are less affected by bottlenecks, and that medium and small chains were more affected. He also said that production in the Free Economic Zone of Manaus is more stable, and the smaller chains are already feeling it.

Weeks ago, Abinee, the electrical industry association, released a survey showing an increase from 16% to 20%, from April to May, in the number of companies that have component inventories below normal. But this rate was higher, at 23%, in March.

Another major chain, Via, was starting to reduce inventory levels last month, which reduces cash consumption. Throughout the pandemic, it increased this volume because of uncertainties in production and delivery. “We have a visibility of improvement in the industry supply for the third quarter. So we have already started, in this [second] quarter, to slow down a little bit the stockpiling,” CEO Roberto Fulcherberguer told analysts in May.

“We are measuring this daily, all the indicators we see up to this point lead us to believe that this will be possible, that we will already have a flatter supply in the third quarter. If we understand something different, we take a step back, but data suggest that we will make a reduction.”

Source: Valor international

United Airlines | LinkedIn

Brazilian airlines are offering a more upbeat view of the market in the second half of the year as vaccination gains steam across states. After demand varied in tandem with contamination rates and a substantial drop in traffic in April, the scenario is now more favorable amid tourism recovery.

Demand for air transport in the Brazilian market measured in revenue passenger kilometers, or RPK, fell 43.4% in May compared to the same period in 2019, before the pandemic, data from the National Civil Aviation Agency (Anac) show. The numbers signal an improvement after the peak of Covid-19 cases this year, which pushed the sector’s demand down by 61% in April compared to the same month of 2019.

In the international market, amid border closures and tourism travel restrictions, the indicators still show strong contraction. Passenger demand in May was 88% lower than that seen in 2019.

As video conferencing replaces business traveling, airlines are increasingly dependent on demand from tourism, one of the segments most affected by the pandemic. But progress on vaccination in Brazil has begun to bring optimism, the Brazilian Association of Tourism Operators (Braztoa) said.

There is already an expectation of improvement in the tourism business field in the second half of 2021. The average sales of the association’s companies now represent 25% of what it was before the pandemic.

Braztoa sees strong demand from people who have already been vaccinated. In total, 71% of tour operators reported that they were sought by vaccinated tourists, and 29% of the trips sold to this public will take place in July, while 47% are scheduled for the second half of the year.

Furthermore, 82% of the operators believe that the approval of Sinovac’s vaccine Coronavac by the World Health Organization earlier this month will positively impact tourism as early as the second half of 2021. For airlines, more tourists means more customers.

In this scenario, Latam has expanded in Brazil. The company recently announced more flights from Guarulhos, Congonhas (São Paulo) and Santos Dumont (Rio), increasing the average number of daily flights to 310 from 250 in June. Compared to June 2019, before the pandemic, the company recovered 63% of capacity. Compared to May this year, the increase is almost 14 percentage points.

The recovery scenario, compounded by both government and private-sector investments in aviation, has encouraged airlines to take new steps in the North region. Gol announced the purchase of Manaus-based MAP Linhas Aéreas, which still needs to be approved by the antitrust watchdog Cade. The acquisition is a step to expand operations in Congonhas. Azul has also announced that it plans to fly to eight new destinations in the North region this year.

The optimism is greater today than last year, when the recovery started only to be interrupted by new cases of Covid-19. Even with the vaccine, however, entities in the sector such as the Brazilian Association of Airline Companies (Abear) have signaled a calm flight only when the country reaches 70% of the fully vaccinated population (with both doses, when applicable). Currently, a little over 11% of Brazilians are fully inoculated.

Source: Valor international

Banco Central do Brasil | Remessa Online

Brazil’s Central Bank increased the projection on the growth of the economy in 2021. The forecast for the expansion of the gross domestic product (GDP), went from 3.6 to 4.6 percent.

The data can be found in the Inflation Report, a quarterly publication put together by the Central Bank, released today (Jun. 24). According to the authority, despite the intensity of the second wave of the COVID-19 pandemic, recent indicators on the country’s internal economic activity continue to show better-than-expected progress.

In the first quarter of the year, the Brazilian GDP increased 1.2 percent compared to the previous quarter, as per the Central Bank, thus returning to the threshold observed in the last quarter of 2019, before the pandemic, with positive results in the three sectors of the economy: services, agriculture, and industry.

Goods and services

The monetary authority expects that government programs supporting companies preserve its offer of goods and services in the medium-run, and that the new round of the emergency allowance and an early Christmas bonus for retirees and pensioners help preserve consumption among families, especially in the second quarter and the beginning of the next.

On the other hand, the Central Bank reported, despite the sharp decline in risks facing the economic recovery, there is still major uncertainties surrounding its growth pace. Among the drivers that could lower the expansion rate are the risk of the development and dissemination of new COVID-19 variants, with new temporary social distancing measures, the difficulties acquiring supplies, and the elevated costs in some productive chains, in addition to possible issues aggravating the water crisis, the worst witnessed by the country in 90 years.

“The water crisis in Paraná’s drainage basin may have negative implications for the generation of electric energy, not to mention the hike in prices stemming from the increased use of thermal power stations,” the text reads.

Higher inflation

Inflation, in turn, as gauged by the National Broad Consumer Price Index (IPCA), is likely to close out 2021 at 4.82 percent in a scenario with the country’s benchmark interest rate (Selic) at 6.25 percent a year in 2021, and 6.5 percent a year in 2022, with an exchange rate starting from R$ 5.05. In the previous report, in March, the forecast had stood at five percent. The Central Bank also estimates that inflation should be 3.8 percent in 2022 and 3.25 percent in 2023.

The prediction is above the target set for the inflation this year (3.75%), with a tolerance interval of 1.5 percentage points, plus or minus.

Source: Agência Brasil