Brazil

Brazil in big corona troubles – next year’s presidential election the only hope?

Thursday, May 6th, 2021

Brazil’s political, economic and social developments remain a mass. Currently, there is almost no light on the horizon.

The social misery (apart from the – since many years back – well-known problems): Covid-19 is a nightmare for this giant country, causing mountains of pain and sorrow. Officially, Brazilian infection (incidence) numbers are currently in relative terms even lower than in Sweden – but most probably much higher than reported (officially 15 million infections which is 7 % of the whole population and more than 400 000 deaths; 7 % is also the share for  the fully vaccinated people https://www.worldometers.info/coronavirus/).

The political misery: Jair Bolsonaro’s presidency has been widely failing, probably also to a high extent in the eyes of his conservative supporters from the presidential election in 2018. Is does not either seem probably that the Brazilian corporate sector can be happy so far with Bolsonaro’s efforts and results. His empathy for the terrible covid-19 disease must be regarded as completely insufficient – despite the fact that he personally was infected as well.

Consequently, many Brazilians see their hope for a better future in a promising change of president in October 2022, hopefully beyond the acute covid-19-crisis. What Brazil primarily needs are major improvements of institutions and education, now and in the longer run.

Can former union leader and Brazilian president Luiz Inácio Lula da Silva (2003-2011) really be able to run for presidency in 2022 year’s elections? He may be eligible again after the Brazilian Supreme Court justice had turned down severe corruption charges against him. Anyway, during his time as a president, Lula achieved some progress in education and socially – but to what extent can he leave the previous accusations of corruption behind?

The economic misery: Looking at the current economic situation, does not make things better. There is no preliminary result for GDP in Q1 yet – but survey results for PMI indices have come down more recently. Furthermore, interest rates have been hiked in 2021, and unemployment has been climbing up. Brazil’s hope for an economic recovery is certainly related to visible progress in the fight against corona – but in the short run possibly even more to a global economic recovery and to better conditions for Brazilians exports already in the forthcoming quarters.

In the meanwhile, we also should hope for relief in the terrible Indian pandemic!

 

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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Brazil – still the country of hope

Monday, October 29th, 2018

Now we know that Jair Bolsonaro will be Brazil’s next president. Can he make a positive difference to previous presidents?

What we do know is that right-wing president-elect Bolsonaro has many radical views which are not particularly popular in a European perspective. At the same time there is no doubt that Brazil needs to meet its burdening challenges much more decisively.

Several decades of economic and political muddling through should finally  come to an end. Will “Brazil’s Trump” – as he frequently is called by opponents – be the man to put Brazil on a more favorable track?

Bolsonaro – who is not very skilled in economics – seems to know what the Brazilians really are tired of, i.e. criminality and corruption. However, research also tells us that these kinds of institutional failures and problems are extremely difficult to combat. It remains to be seen whether Bolsonaro will find the appropriate sustainability and means to fight successfully against crime and corruption.

However, this is exactly the main reason why a majority of the Brazilian people voted for him. But his voters also want to see major improvements of the strongly underperforming educational system.

Good education on all levels for a small minority and poor educational conditions for a vast majority has been characterizing the stance of education during many years.

This negative spiral has to broken if Brazil ever can develop into a really future-oriented and successful economy – but also the continuous weak fiscal performance which means a real obstacle to many other necessary structural improvements as well.

One can question whether these objectives can be met by a real hardliner like Bolsonaro without jeopardizing achieved democracy.

In the early days of my professional career in the early 1980s, I was always told that Brazil is the country of the future. Somewhat later when I started visiting Brazil regularly, I heard the same story – and still today but with a more skeptical sound.

Brazil is another example from the international area where heavy protests against insufficient political and economic results these days more strongly come from the right than from the left.

As usual, I am reluctant to spontaneous comments when political changes happen in Latin America. Too often disappointments followed later on.

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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Will Brazil ever learn?

Monday, May 29th, 2017

In 2016, Brazil has been affected by serious worries again. Last year, then president Dilma Rousseff was kicked out of office. GDP shrank by 3.6 percent, after a decline by 3.8 percent in 2015 – indeed a sharp recession. The annual budget deficit amounted to 9 percent of GDP. The need of major structural improvements became therefore very urgent.

For this reason, Rousseff’s conservative successor Michel Temer launched an economic reform programme but is now obviously confronted with major obstacles – obstacles that are directly tied to the president himself, the social consequences of the implemented and planned fiscal austerity measures (spending limit in real terms in the forthcoming two decades), and – above all – his suspected involvement in a dramatic corruption scandal. Bribery allegations are always serious.

Also the “timing” of Brazil’s new crisis is not encouraging since Brazil these days most probably was/is about to leave its long-lasting recession. In the past few weeks, a slight improvement of confidence in the future could be noted again. In vain?

To give an answer to this question urges for more political clarification and details we still do not know anything about. Here we get to another example of the intensifying link between politics and macroeconomic developments. Thus, it is crucial that economists/financial analysts are willing to improve their understanding of political events and trends substantially.

Exactly one year ago – before the impeachment against then president Dilma Rousseff – I wrote the following lines on this page:”… Brazil remains unable to achieve sustained good economic growth…It is really an up-and-down economy…This distorting phenomenon will not be wiped out before Brazil really can manage far-reaching and continuous reforms regarding a broad and good human capital formation, better institutions and a fairer distribution of income – accompanied by more effective and future-oriented political leaders all over the country…”.

Also now – before a possible impeachment against Rousseff’s successor, the unpopular Michel Temer – these lines are applicable. This will be the case as long as Brazil’s political leaders neglect the obvious correlation between well-working institutions and sustained economic growth. They should try to understand and apply the conclusions of Douglass North, Daron Acemoglu, and other institutional economists. According to North, institutional research also includes tradition and habits, both good ones and bad ones. Corruption can hereby serve as very important example for bad institutional conditions.

Unfortunately, the applied question remains in place: Will Brazil ever learn?

 

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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