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The Brazilians will go to the polls on Sunday to choose between an heir to the leftist leader and what many call the "Brazilian Donald Trump" in the second round of the presidential election.
The race for the presidency comes as the country continues to evade the widespread corruption denounced during the "Operation Car Wash" of 2014, one of the world's largest investigations into government corruption. . The scandal finally led to the arrest and imprisonment of a former president, Inácio Lula Da Silva, and the ousting of his successor, President Dilma Rousseff, in 2016, for failing to comply with tax rules. Dozens of politicians as well as the largest companies in the country have also been involved.
Cynicism and mistrust of the political system go up at least. However, voting is mandatory in the country and more than 140 million Brazilians are expected to vote. On October 7, 46 percent voted for Jair Bolsonaro of the right-wing social-liberal party and 29 percent for the former mayor of Sao Paulo, Fernando Haddad, of the left-wing Workers Party (PT). Since neither candidate claimed to have more than 50% of the votes needed to win the presidency in the first round, the two candidates at the top of the list must face each other again.
Here's what they are facing: the consequences of a truckers strike that took hold of the country in May, the ongoing recession, the high unemployment rate, and the depreciation and volatility of the national currency. Both candidates offer different alternatives to keep the economy afloat.
The Bolsonaro Economic Project is part of a project entitled "Brazil, Above All. God above everyone, "and he refers to John's book, 8:32, which says," Then you will know the truth and the truth will set you free. Blaming Brazil's financial difficulties for a "populist" policy, he said. It intends to reduce public spending and balance the public debt by 20%, as soon as possible, through a large-scale privatization and sale of companies. 39; State. He is also committed to open markets. "With more competing companies, the consumer improves and he has access to more options, better quality and a lower price." The miracle solution? International Trade – "the reduction of many import rates and non-tariff barriers, along with the establishment of new bilateral agreements," reads the master plan.
Haddad's strategy is focused on promoting the policies of his mentors, the two fallen figures of the Brazilian leftist movement. "The Lula and Dilma governments have created more than 20 million jobs," wrote Haddad in his "A Happy Brazil Again" plan.
Unlike Bolsonaro, he said he believed in the expansion of the government, as well as the use of state-owned banks and the role of oil company Petrobras as a "strategic development agent" in the fields of exploration. , the production, refining and resale of fuels. While Bolsonaro wants to redistribute the tax burden "so that those who avoid pay more and those who pay a lot are seeing a reduction," Haddad said that he considered employment as a way to fight against corruption. Tax evasion and the engine of retirement finance in Brazil. system.
Whatever the presidential candidate, the new leader will not have the easy task of getting out of the institutional and economic malaise. "The pace, scope and quality of post-election policy adjustments are uncertain," a report released in August by Fitch Ratings said. "The presidential elections offer various options for the required adaptation of fiscal policy. In addition, the winner's base in Congress would be an important indicator for assessing governability and post-election reform prospects. "
General government debt is expected to reach 77.5 percent of GDP in 2018 and continue to grow in 2019-20 and beyond, said Fitch. The same credit rating agency has awarded Brazil a "BB-", which means that the country is still experiencing "weak growth prospects, a difficult political environment and corruption-related problems that have weighed on the economy." effectiveness of economic diversity ".
According to local reports, Brazilian economists do not believe that any proposal offers concrete solutions and that current policies such as the reduction of public spending through reforms and privatization will continue. Nevertheless, the Brazilian market would prefer that Bolsonaro be the next president, because the party of Haddad recently invoked the increase of the public expenses, which at the same time increases the taxes – to which the market opposes categorically. In fact, as Bolsonaro expanded its lead over Haddad before the first round of elections, the Brazilian stock market had risen 2%, the strongest since May 2017.
But not all experts admit the administration of Bolsonaro. "A Bolsonaro victory would likely have very damaging effects not only on the Brazilian economy, but also on the preservation of Brazilian institutions," said Monica de Bolle, a research fellow at the Peterson Institute. International Economics, Washington, D. Newsweek. "He is running up against his pro-market economic adviser – Bolsonaro is a nationalist in the soul – proving that the economic agenda is only an improvising exercise in the part of his campaign. Markets have been deceived into thinking that her presidency would provide the stability she so badly needed. It's not right. I see the coming turbulence and great social upheaval. "
Others, however, believe that it is too early to accurately determine the prospects of the Brazilian economy. "On the one hand, I do not see any major difficulties in attracting talent to an economic team and I do not expect major government interventionism in the regulated sectors, oil and gas or gas." This means that investments in infrastructure will accelerate, "said Zeina Latif, chief economist at the Sao Paulo-based investment firm XP, Newsweek. "On the other hand, there are doubts about Bolsonaro's political skills to form a broad coalition in Congress, which is needed to approve constitutional bills, such as social security reform. A poor fiscal adjustment program could hurt growth through stronger inflation and tight monetary policy. "
Elections in Brazil could also have repercussions on the international scene. Considered as one of the world's leading bread baskets, the South American giant is also ranked among the world's 10 largest economies. Although China is its main export partner in 2017 (with 21.8% of its total share according to Statista), and the United States, its second largest trading partner, with 12.5% of its share of total exports for the same year, the repercussions of the election the effects will probably be felt elsewhere.
Bolsonaro hinted at Brazil's withdrawal from Mercosur [an economic bloc also comprised of Argentina, Paraguay, Uruguay and Venezuela] This would undoubtedly create externalities and negative consequences for the country and for its relations with Latin America and Europe, "said Roberta Braga, Deputy Director of the Adrienne Latin America Center of the Atlantic Council, Washington . Newsweek. "Bolsonaro has made statements stating that his goal is to establish closer ties with President Donald Trump. The main candidate has been compared to Trump in many ways. Both indicated that they were in favor of bilateral trade agreements in relation to multilateral agreements. They rely heavily on a conservative base of voters, primarily using social media to reach them. "
Despite the misogynistic and anti-gay rhetoric of Bolsonaro – which has sparked fear among Brazilian minorities and progressives – many Brazilians believe that Bolsonaro represents a break from the political establishment that has done more harm than good, especially after the Car Wash operation. Losing candidates such as Guilherme Boulos and Ciro Gomes, who came third with 12.5% of the vote, rallied behind Haddad. "One thing I can tell you now, as you have already seen: my story is a story that defends democracy and fascism," Gomes said in a statement.
On the economic front, however, time will only tell if the future president will be able to reconcile the modernization of Brazil's economic agenda with congressional support.
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