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  • Archive for May, 2017

    Brazilian Finance Minister predicts employment recovery in 2017

    2017 - 05.08

    Brazilian minister of finance Henrique Meirelles has predicted the labour market will reverse the negative trend before the end of the year.

    Speaking at an event in Washington, he asserted that there are definite signs of economic recovery ahead, but stressed the importance of approving economic reforms so the country could consolidate the recovery of growth.

    “There is no doubt that we will see a strong spike in employment in 2017. Afterwards, certainly very strong recovery in 2018, causing unemployment to fall sharply,” said the Finance Minister. “Our conviction is that the approval of these reforms will soon become reality so this growth of the economy can be consolidated.”

    Meirelles predicted that Brazil should begin to show growth in the first quarter, and lauded the signs of economic improvement that are already becoming evident.

    Forecasts have Brazil growing between 0.5 and 0.7 per cent quarter on quarter in the three months ending in March, with Meirelles expecting a 2.7 per cent expansion when compared with 2016’s last quarter.

    “The reason is that Brazil had a much worst-than-expected recession last year. And then, the GDP further declined and we had a lower basis to start the year with,” said Meirelles. “But we are already growing month-on-month.”

    The boost in employment will in part be due to the modernisation of labour laws. Another important factor will be pension reforms.

    The pension reform is currently under review by a special committee of the Chamber of Deputies. Approving it would provide for the adoption of a minimum retirement age of 65 for men and 62 for women.

    In 2016, the deficit in Brazil’s social security budget was R$ 149.7 billion, and it’s forecast that the shortfall for this year will rise to R$188.8 billion. Without pension reform, it’s estimated that the deficit will reach R$202.2 billion.

    The traction that the Brazilian economy is beginning to regain will no doubt have positive knock-on effects for the timber industry, with a boost to investment returns.

    Brazil’s industrial production ‘recovering’

    2017 - 05.05

    Industrial output in Brazil enjoyed its best quarter one since the first three months of 2013, data shows.

    Brazil’s government said that as the country’s economy begins to recover, industrial production is beginning to show “signs of recovery” in good news for forestry investors.

    Figures from the Brazilian Institute of Geography and Statistics (IBGE) show growth in the industrial sector of 0.6 per cent for the first quarter of 2016.

    This is the first time since 2013 – when output increased by 2.1 per cent – that industry growth has been positive, after experiencing “bitter consecutive losses”.

    “However, the scenario began a reversal in the wake of the reforms and measures implemented by the government,” it said in a statement.

    “Losses were gradually turned into positive results. The sector’s performance is still far from ideal, now close to 2008 numbers, but is expected to fully recover in the coming months and years.”

    The IGBE said more industries are reporting growth, with positive results seen in two of the four major economic categories.

    Among the sectors surveyed, those that made the greatest contributions to the positive results were mining and quarrying (8.2 per cent) and motor vehicles, trailers and vehicle bodies (11.5 per cent).

    Other major contributors include computer equipment (18.3 per cent), apparel and accessories (eight per cent), metallurgy (1.9 per cent), rubber and plastic products (2.7 per cent), textiles (6.2 per cent) and machinery and equipment (two per cent).

    Macquarie buys UK Green Investment Bank

    2017 - 05.01

    Macquarie, an Australian bank known for infrastructure financing, has led the purchase of the British government’s Green Investment Bank for £2.3 billion, according to reports.

    Macquarie, which was joined by Macquarie European Infrastructure Fund 5 and the Universities Superannuation Scheme, a UK pension fund, has made the investment as part of plans to expand its green investment foothold across the UK and Europe.

    Since it was first launched in 2012, the Green Investment Bank has invested a total of £3.4 billion in public funds in more than 100 low-carbon and green infrastructure investment projects.

    Currently, the Green Investment Bank has stakes in 85 projects across a variety of sectors, including an energy efficient street lighting project in Barking and Dagenham and a wind farm in Dumfries and Galloway.

    The bank is also responsible for managing the world’s first offshore wind fund, which includes private capital from a sovereign wealth fund, European institutional investors and a number of UK pension funds

    Following the announcement of the deal, critics questioned the sale over concerns the Australian bank could strip the bank’s assets. However, Macquarie said ‘special share’ arrangements held by independent trustees will safeguard the bank’s green purpose.

    Mirroring these concerns, environmental groups have urged Macquarie to stay true to the bank’s original purpose by honouring its mission to green mission and providing substantial capital for green investments.

    Karen Ellis, chief adviser on economics and development at WWF-UK, said: “Numerous market failures are constraining the availability of finance for green investment, so to ensure the Green Investment Bank continues to deliver on its mandate, it should invest in novel green projects, which are less likely to be funded privately; it needs to focus on crowding in additional finance by reducing the barriers to investment.”