April 5, 2019


1. Economy Minister’s visit to Congress marked by intense debate

Opposition legislators and Economy Minister Paulo Guedes had an intense debate surrounding retirement reform in the Chamber of Deputies. The meeting, which lasted 6 hours, took place in the lower house’s Committee on Constitution, Justice and Citizenship and counted with the participation of hundreds of representatives. Guedes answered questions and listened to a lot of criticism of the Bolsonaro administration’s flagship bill. Members of the opposition controlled the meeting’s time and monopolized opening speeches. Brazil’s governing party, the PSL, was represented bylargely inexperienced members who mostly refrained from participating. Parties from the center also dampenedtheir participation but became the focus of the government‘s efforts to sway them in favor of the bill. The meeting ended after the discussion took a turnwhen opposition representative Zeca Dirceu and Guedes traded insults.Prior to that, Guedes had indicated the possibility of a political deal that would address some of the opposition’s requests. Against this hostile backdrop, retirement reform will be discussed over the next few weeks.

G1: Audiência na Câmara termina em tumulto após bate-boca entre Paulo Guedes e deputado
O Estado de S. Paulo: ‘Se reforma for fraca, daqui a 4 anos vocês estarão aqui de novo, eu não’, diz Guedes na CCJ

2. Senate approves bill that limits government power over federal budget

On Wednesday, senators approved a constitutional amendment that restrains the power of the executive branch over the federal budget. This means the government will have to comply with budget proposals and demands made by groups in Congress. The Senate softened some clauses of the bill before it was sanctioned last week by the Chamber of Deputies, most notably regarding the gradual implementation of the new system. Following these modifications, the bill will now return to the Chamber of Deputies. If any further changes are made, the Senate must approve the bill once again. Given that it is a constitutional amendment, a consensus in Congress is required. In the meantime, Jair Bolsonaro’s administration has time to negotiate changes and attempt to avoid a future defeat.

G1: Senado aprova com mudanças PEC do orçamento; texto volta para a Câmara
Valor Econômico: Senado aprova PEC do Orçamento Impositivo, mas texto volta à Câmara
Folha de S. Paulo: Após acordo, senadores aprovam PEC do Orçamento impositivo

3. Bolsonaro returns from Israel, decides to open trade office in Jerusalem

Upon President Bolsonaro’s return from a trip to Israel, he announced the opening of a trade office in Jerusalem. The announcement is considered an adjustment on Bolsonaro’s campaign promise to relocate the Brazilian embassy to Jerusalem from Tel Aviv. According to the Ministry of Foreign Affairs, this will be the world’s second Brazilian trade office, following Taiwan’s. This alternative to the embassy move emerged from a suggestion by a congressional group representing rural workers and farmers, as well as by representatives of the military, concerned about a potential retaliation on the part of Arab countries – important trade partners for Brazil. This solution, however, was not enough to ease the minds of either Israelis or Arabs – Israel is frustrated Brazil did not relocate the embassy, while Arab countries are considering the possibility of trading with other countries.

Valor Econômico: Brasil terá escritório em Jerusalém, mas mantém embaixada em Tel Aviv
Folha de S.Paulo: Bolsonaro frustra Netanyahu com escritório em vez de embaixada em Jerusalém

4. World Bank reports economic growth, but calls attention to an increase in poverty

In a report published on Thursday, the World Bank took note of the negative consequences of Brazil’s financial crisis that lasted from 2014 to 2017. The body’s primary concern is a significant uptick in poverty – which now affects over 7 million Brazilians. The crisis also pushed an additional 4.4 million people into extreme poverty. Despite the negative results of the report, the World Bank forecasts stable economic growth over the next two years – at a rate of 2.4% in 2019 and 2.5% in 2020 – although these figures also depend on the administration’s ability to pass key structural reforms. The entity also published an analysis of Latin American regional prospects, with growth projections lowering significantly to 0.9% from 1.7%. 

Valor Econômico: Banco Mundial prevê expansão menor na AL e mais pobreza no Brasil
Folha de S. Paulo:Crise empurra 7,4 milhões de brasileiros para pobreza, segundo dados do Banco Mundial

5. Vehicle sales increase in the first quarter of 2019

In their quarterly audit, the National Association of Vehicle Manufacturers and the National Federation ofAutomotive Vehicle Distribution reported an 11.4% increase in sales of new vehicles in Q1. In the first three months of the year a total of 607,612 cars, trucks and buses were sold. During the same period in 2018,545,478 vehicles were sold. The month of March has proved fruitful for automotive sales since 2014, even though the Carnival holiday usually causes a fall in sales. Both the manufacturing and sales sectors expect favorable results through the end of the year and into 2020. Positive expectations, however, depend on an improvement in the political situation and the approval of key reforms. The sector is sensitive to fluctuations caused by political decisions regarding the economy.

G1: Venda de veículos novos sobe 11,4% no 1º trimestre de 2019, diz Fenabrave
Valor Econômico: Venda de veículos tem melhor março desde 2014, apesar do Carnaval