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Whilst reports have continued throughout the month of the economy’s overall improvement – with some estimations expecting growth to reach up to 8 percent for 2010 – concerns as to the Brazil’s infrastructural ability to keep up the pace have increasingly emerged.  The reality of the situation was bought to home when over 150,000 people in the Alagoas and Pernambuco states of the north east were left homeless as a result of heavy rains.

In housing news, an informal survey of the country’s largest constructors saw 47.52 percent believing that Brazilian valuations were unsustainably high, stating that they were forecasting the necessity to drop their prices in order to sell stock in the short term future (24.52% believed that the issue only lied in the larger state capitals whilst 14.52 percent believed that market demand and bank finance will mean that prices will continue to rise).  Citigroup also criticised the central bank for not raising the SELIC quick enough which would have avoided the issue of possible asset bubbles emerging.

Nevertheless, global credit ratings agency Fitch increased the Brazilian outlook from ‘stable’ to ‘positive’ owing to the countries strong ‘growth dynamics’ and ‘prudent policy making’. At the G20 Summit, leaders agreed to tighten international reserve requirements with the Brazil’s central bank stating that a new Basel index will be introduced during 2012 that ‘will improve risk management in the market and ensure the competitive position of the country’s financial institutions.’  At the same time, Banco do Brasil was seen preparing itself for raising the largest share issue in its history of R$ 10.9 billion (following a similar move by Banco Santander of R$ 7.5 billion in 2009).  The main bookrunners are BTG Pactual, Citigroup, JP Morgan and Bank of America-Merrill Lynch. The state owned oil company Petrobras also stated their intention to raise an estimated R$ 25 billion in September.