Temer’s pension reforms face stiff opposition

Brazil’s unions have planned a day of struggle to protest Temer’s proposed social security reform bill. The president is already very unpopular in Brazil; polls show voters want him to be accountable for alleged corruption [Xinhua]

Brazilian President Michel Temer is facing a tide of opposition regarding his promise to reform the social security program.

Many among his supporters see the reform initiative as damaging to their relection bids in the general election next October.

But in an interview aired on Brazilian TV on Friday night, Temer said the reform bill had not been defeated.

According to the constitution, Temer’s already watered down proposal requires 308 of 513 votes in congress to pass. His supporters say they have around 270 right now, up by about 40 since October.

Some analysts expect Temer and his Democratic Movement Party to make further concessions in the first few weeks of the year to bridge the deficit in supporting votes.

In the meantime, Brazilian unions have scheduled street protests for February 19 as a “national day of struggle” – the day the lower house of Congress is expected to vote on the reform bill – to voice popular opposition to Temer’s reform package.

Temer has said that he wants to lift the retirement age, for example, well into the 60, easing the burden on the national coffers. Temer’s proposal would have men retiring at 65 and women at 62.

Most Brazilians in the public sector retire in their mid to late 50s.

In the rural industries, women will retire at 55 and men at 60, according to the proposal.

He also wants to reform the public pension regimen.

To be eligible for full pension, employees in the public sector will have to work 25 years; in the private sector, 40 years.

Temer has said that overhauling the pension system is necessary to cap government spending, which some economists say was overblown and a factor in the recession since 2014.

But most social activists are angry that Brazilian politicians are insisting on the need for cuts in benefits and public services even as evidence grows that they benefited personally from illegal kickbacks on overinflated contracts. President Temer is also facing charges of taking multimillion-dollar bribes.

The proposal to modernize Brazil’s labor laws, some of which date back to the 1940s, is backed by Brazilian businesses so they can lower labor costs that allegedly undercut their ability to compete in foreign markets.

By Firas Al-Atraqchi with inputs from Agencies

Rapid urbanization a challenge for BRICS countries

Major cities in Brazil, China and India are witnessing rapid urbanization [Xinhua]

The Malaysian capital of Kuala Lumpur will next week host the Ninth Session of the World Urban Forum to discuss the challenges societies as more people move to the cities.

The forum titled, Cities 2030, Cities for All: Implementing the New Urban Agenda, will focus on the efforts of major countries, such as China, India, and Brazil to overcome the challenges posed by rapid urbanization.

Some of these challenges include the ever-growing income gaps, smog and pollution, and crumbling infrastructure which can no longer support such population growth.

In 2018, about 50 per cent of the global population is living in cities. But the World Bank says that by 2050, 70 per cent of the global population will be living in cities.

In Delhi, for example, the number of residents living in the capital has grown from 9.7 million in 1990 to 25.7 million in 2015.

In fellow BRICS member, China, cities such as Beijing and Shanghai have seen their populations grow from 6.8 million to 20.4 million, and 7.8 million to 23.7 million, respectively, in the same period.

For Brazil, Sao Paulo has witnessed 14.8 to 21.1 million residents in the 25-year period.

For Africa, the greatest urbanization has happened in Cairo, from 9.9 million in 1990 to 18.8 million in 2015.

The rapidly changing climate and regional conflicts which have lately produced tens of millions of refugees further exacerbate the pressures these cities and others face, the World Bank says.

Read more: BRICS tackles urbanization

The BRICS Post

Is Brazil back in business?

Temer is trying to push a package of spending cuts through parliament and other measures to lift Brazil out of its worst recession in decades [Xinhua]

Despite ongoing political turbulence following a slew of corruption charges aimed at sitting and previous leaders and lawmakers, Brazil’s economy appears to have bandaged itself and started to grow again.

Brazilian President Michel Temer is riding the wave of success that his austerity measures and other economic decisions have helped pull the country out of a debilitating -3.3 per cent GDP growth in 2016.

Brazi is now on course to reach at least 2.5 per cent growth in 2018, he says.

In its latest assessment of the Brazilian economy, the International Monetary Fund said that “the economic recovery is gaining strength, spurred by private consumption and investment”.

It listed as a significant positive marker the fall of inflation from two digits to 3 per cent after heavy intervention from the Central Bank.

However, its latest forecast for growth in Brazil is an upward revised 1.9 per cent (from 1.5) in 2018 and 2.1 per cent in 2019.

Brazil’s Finance Minister Henrique Meirelles says he is confident that the IMF will gradually revise its GDP growth forecast for his country to come more in line with what local analysts have predicted.

Temer has used such data to state at the World Economic Forum in Davos that Brazil is back in business.

But the country must overcome ratings downgrades, such as S&P reducing Brazil’s credit rating from BB to BB-, and the unemployment rate.

Both the IMF and the World Bank warn that continued political instability could derail Brazil’s long road back to recovery.

The country will hold general elections next October.

Last week, a court ourdered the seizure of former President Luiz Inacio Lula da Silva’s passport after his corruption conviction on charges of bribery and money laundering was upheld.

Lula had planned to run in the October elections.

The BRICS Post with inputs from Agencies

CEO of JP Morgan Chase: ALL Cryptocurrency Will Be Under Government Control

(Matt AgoristLate last year the Chairman & CEO of JPMorgan Chase, Jamie Dimon became the laughing stock of the crypto world when he came out railing against bitcoin and the blockchain. On Tuesday, however, he seems to have changed his mind and during an interview with Fox Business, he left viewers with an ominously cryptic message—punn intended—on how the government will control bitcoin.
Read more »

Economists are playing catch-up with economic reality

Economic growth forecasts for 2018 have been ratcheted higher as data exceeds expectations

Growth rates in BRICS nations such as China and India have exceed expectations of the IMF and other forecasts [Xinhua]

The news that China’s GDP growth in 2017 was 6.9 per cent as opposed to the government target of 6.5 per cent and the January 2017 international Monetary Fund (IMF) projection of 6.5 per cent is merely the latest in a sequence of economic data releases that has pushed economists to play catch-up with economic reality.

China is also not the only BRICS member county to see economic data exceed expectations.

Brazil has surprised by how robust its economy has performed despite the ongoing corruption allegations and the stalled political reform agenda.

Russia has exceeded expectations both in terms of growth and low inflation, while India has started to recover from the high-denomination rupee withdrawal of November 2016. South Africa has recently seen accelerating growth after a slow first half.

The IMF in January 2017 forecast that Brazil would only grow by 0.2 per cent in 2017. Full year figures have not yet been published, but the Brazilian economy expanded by 1.4 per cent y/y in the third quarter of 2017, following a 0.4 per cent y/y gain in the second quarter and better than the consensus forecast of 1.3 per cent.

It is the fastest growth rate since the first quarter of 2014, boosted by a jump in household consumption spending and exports.

The IMF in January 2017 forecast that Russia would only grow by 1.1 per cent in 2017. Full year figures have not yet been published, but the Russian economy expanded by 1.8 per cent y/y in the third quarter of 2017, following a 2.5 per cent y/y gain in the second quarter and better than the consensus forecast of 1.6 per cent.

The economy was boosted by a jump in household consumption spending and exports on the expenditure side and by farming and manufacturing on the production side.

Agriculture advanced by 3.8 per cent y/y in the third quarter after a small 0.1 per cent y/y rise in the second quarter.

The export performance was particularly robust as the oil price recovered from the January 2016 lows. That meant Russia’s trade surplus widened by 28.4 per cent y/y to US$ 11.52 billion in November, which was above market expectations of a US$ 11 billion surplus.

In the first eleven months of 2017, the trade surplus widened sharply to US$101.63 billion from US$ 78.5 billion in the same period of 2016.

The IMF in January 2017 forecast that India would grow by 7.2 per cent in 2017, but full year growth in 2017 is unlikely to exceed 6.5 per cent as the structural reforms have had a larger than expected impact.

Full year figures have not yet been published, but the Indian economy expanded by 6.3 per cent y/y in the third quarter of 2017, following a 5.7 per cent y/y gain in the second quarter, which was the lowest growth rate in nearly three years. A rebound in investment and inventories offset a slowdown in both private and public spending.

Fourth quarter growth should exceed expectations as the November 2016 disruption falls out of the comparison period. India’s industrial production surged by 8.4 per cent y/y in November 2017 easily beating market expectations of 4.4 per cent.

It was the steepest increase in industrial production since June 2016, boosted by strong growth in manufacturing, which soared by 10.2 per cent y/y.

The IMF in January 2017 forecast that South Africa would grow by 0.8 per cent in 2017. Full year figures have not yet been published, but the South Africa economy expanded by 1.3 per cent y/y in the third quarter of 2017, following a 0.9 per cent y/y gain in the second quarter.

The third quarter growth was the fastest since the first quarter 2015 and was boosted by exports and household consumption expenditure.

Fourth quarter growth is likely to exceed 2 per cent y/y as South African bulk export volumes rose by 4.9 per cent in 2017 to a new record of 171.3 million tons, while real retail sales surged by 8.2 per cent y/y in November for the highest y/y growth rate since June 2012.

The higher than expected growth in 2017 therefore sets up these BRICS economies for an even higher growth rate in 2018.

This is especially so as economists are having to do the same catch-up in their forecasts for developed economies as shown by the consensus forecasts from UK-based Consensus Economics.

The US for instance has had its 2018 GDP growth forecast increased from 2.4 per cent in January 2017 to 2.7 per cent, while Germany has moved from 1.8 per cent to 2.3 per cent over the same period.

France has been upgraded to 1.9 per cent from 1.6 per cent, while Japan’s GDP growth forecast has improved from 1.1 per cent to 1.4 per cent. Only the UK has remained stagnant at 1.4 per cent.

The stronger developed countries’ growth bodes well for BRICS growth as most economies need improved exports to boost their economies in 2018.

Helmo Preuss in Grahamstown, South Africa for The BRICS Post