Brazil freezes Rio's accounts over unpaid debt

RIO DE JANEIRO, Nov. 8 (AFP)

The Brazilian government froze Rio de Janeiro state's bank accounts Monday, ordering the
struggling state to pay up on $53 million in overdue debt.
Rio, one of the states hardest hit by a deep recession in Brazil, "is blocked from making any
kind of payment until the amount it owes the state has been paid," said the state finance
secretariat. Officials said the freeze would only apply for three days, and would not prevent the
state from paying civil servants' salaries on November 16.
Pummeled by Brazil's worst recession in a century, Rio is nearly bankrupt, with total debt set
to reach 17.5 billion reals ($5.4 billion) by the end of the year. With tax revenues plunging, the
state has had to make drastic cuts to health, security and other sensitive budget lines.
On Friday, Governor Luiz Fernando Pezao announced a package of tough austerity measures,
including cuts to social programs, a tax hike for retirees, a sales tax increase and a transport fare
rise. The unpopular proposals must now pass the state legislature.
"If this package isn't approved, there's nothing else we can do," Pezao told TV Globo on
Monday. "We would start next year with a hole of more than 50 billion reals, and from there, we
wouldn't be able to guarantee paying workers their full salaries in 2017." Rio has already warned
it may not be able to pay employees their December bonuses.
Brazil has been hit hard by a plunge in global prices for its commodity exports, as well as
political gridlock caused by the impeachment of former president Dilma Rousseff over
accounting irregularities. The economy, Latin America's largest, shrank 3.8 percent last year, and
is facing another contraction of three percent this year.

Chinas Exports Drop for a Seventh Month on Tepid Global

Demand
BEIJING, Nov. 8 (Bloomberg)
Chinas exports fell for a seventh month, leaving policy makers reliant on domestic growth
engines to hit their economic expansion goals.
Overseas shipments dropped 7.3 percent from a year earlier in October in dollar terms.
Imports slipped 1.4 percent. Trade surplus widened to $49.1 billion. A depreciation of about 9
percent in the yuan since August 2015 has cushioned the blow from tepid global demand, but
failed to give shipments a sustained boost.
Rising input costs and surging wages have flattened exporter profit margins to the point
where many can no longer discount and may raise prices, according to interviews at the Canton
Fair last month.
With global demand tepid, policy makers are relying on infrastructure investment and a
property led pick up in local demand to reach their expansion goal of at least 6.5 percent this
year.
Economist Takeaways
"External demand remains sluggish across the board," said Julia Wang, an economist at
HSBC Holdings Plc in Hong Kong. "On the import side, commodities demand is still holding up
well, suggesting that domestic infrastructure investment likely remains strong."
"Trades contribution to Chinas economy is now diminishing as the economy increasingly
depends on domestic demand," said Zhu Qibing, chief macro economy analyst at BOCI
International (China) Ltd. in Beijing.
Exports to U.S. slipped 5.6 percent in October and fell 8.7 percent to EU. Imports from U.S.
fell 6.9 percent. Exports slipped less when measured in yuan as depreciation cushioned impact of
tepid global demand. Crude imports fell from record. Coal imports fell for a second month.