Economy

Economy, Foreign Policy, National Politics

Will Dilma Rousseff be able to foster foreign direct investment to save the fiscal package and resume economic growth?


by Cassiano Alves and Leticia Corrêa

On June 28th, President Dilma Rousseff landed in the United States for an official visit, leaving behind an economy in imminent recession and a country in political crisis after the corruption scandal involving state-owned oil company Petrobras.

Speculation over Mrs. Rousseff’s impeachment resurfaced after a national magazine reported that Ricardo Pessoa, the owner of construction company UTC Engenharia, told authorities that the president’s campaign in 2014 received illegal donations. UTC Engenharia is one of the firms accused of forming a cartel and paying kickbacks to politically appointed directors at Petrobras.

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Economy, National Politics

New Infographic Series on the Economic and Political Situation in Brazil


Brazil is in crisis. The economy shrank 0.2 percent in the first quarter, and the forecast is for negative growth of 1.2 percent this year. Unemployment rate reached 6.4 percent in April, its highest level in four years. There is also pessimism on consumer prices, raising the 2015 inflation forecast from 7.93 percent to 8.12 percent, above the central bank’s inflation target rate of 4.5 percent.

Politically, there is not much cause for optimism for Brazilian President Dilma Roussef, whose approval rating is at a record low 13 percent, according to an April 10 Datafolha poll. The government has lost influence over the legislative agenda and has been struggling to pass tax increases and cuts to social benefits meant to shore up fiscal accounts. Eduardo Cunha, speaker of Camara dos Deputados, Brazil’s lower house, is the man behind controversial actions that have threatened to derail the government coalition just months into Ms. Rousseff’s second term. Mr. Cunha is from the Brazilian Democratic Movement Party, supposedly the government’s most important ally; but he was elected speaker with the promise of independence from the Executive. Under his command, Camara dos Deputados has held 121 voting sessions in the first five months of 2015, a record number for the beginning of the legislative year since 1995.

This is not necessarily good news for the country. Today, Congress has more weight and more strength; it has also become more conservative and more self-centered. Two weeks ago, Mr. Cunha and his supporters pushed forward political reform measures after outmaneuvering other members of the house and disregarding three months worth of work from a congressional commission. Among the proposals approved in the first round were the private financing of political campaigns and the end of reelection in the Executive. The constitutional amendments still have to undergo a second round of voting in the lower house before moving on to the Senate for approval.

Starting this week, Brazil Talk will closely follow the economic and political situation in Brazil with a series of infographics that will inform our readers about the struggle for power in Brasilia as the government attempts to recover the economy. The first infographic – Austerity Ahead – explains the fiscal measures sponsored by finance minister Joaquim Levy to hold on to Brazil’s investment-grade credit rating and hit a primary surplus target of 1.2% of GDP by the end of this year. Mr. Levy has also slashed almost 70 billion reais from planned discretionary spending for 2015 and urged lawmakers to back tax increases. But Congress approved softer versions of the austerity bills, upsetting Mr. Levy’s efforts to increase government revenue.

Austerity Ahead

Economy

The Infrastructure Issue in Brazil


by Eloy Oliveira

The ability to broadly provide infrastructure for its population is the basic premise for a country’s sustainable growth and economic development. There is a great consensus among scholars that infrastructure directly affects the development of a society (ABOSEDRA et al., 2009; MANDEL, 2008; FRISCHMANN, 2007; PENDSE, 1980). As used, the term infrastructure is very broad, since it may involve several activities that are distinguished depending on their economic and technological nature.

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