We had a great surprise in 2013, when thousands of Brazilians protested against the World Cup and wanted comprehensive changes in Brazilian politics, against bad public services in education, transport and health as well as against corruption. These protests reached all political class, and the evolution of these movements resulted in claims of the Brazilian civil society, whose agenda was assumed by public opinion and also by the Judiciary. The facts led Congress to pass a draconian law against Corruption and Transparency in Public-Private Management, leading well known entrepreneurs to trial and prison, as well as politicians from many parties. The pressure from the civil society for a better management, with transparency, without corruption culminates in the impeachment process of President Dilma Rousseff. The impeachment process based on the Brazilian constitution, was widely reported on live television media and accompanied by the Brazilian Society with full attention.
Vice President Michel Temer assumes the post on an interim basis and selects in the economic area ministers of international experience: Henrique Meirelles (former Central Bank President) , Jose Serra for Foreign Affairs, Ilan Goldfajn from Banco Itau for Central Bank among others. He also set new directions in the Brazilian politics, based on the recovery of the economy, state reduction, privatization and pension restructuring. The composition of fewer Ministries was aimed at Congress, expecting for approval on difficult projects, some of them demanding majority of 2/3 with constitutional changes.
The presidential coalition system, set by the 1988 Constitution, obliges the President to compose a majority in Congress, which currently has more than 22 parties. The difficulty of governance in this system is evident and requires a democratic political reform with strengthening few parties with strong presence. Political parties, not only in Brazil, can no longer answer to speed the issues raised by the highly connected civil society, well informed and mobilized. The reform requires innovations in the representative systems, using consultation mechanisms and computerized party decisions. The transparency and efficiency in management, with ethics, without corruption becomes imperative. The anti-corruption processes will continue.
This civil society mobility trend extends in a democratic Latin America, in rapid proportions. The consequences may be, at best, the strengthening of democratic institutions, integration and mobility, giving course to very interesting developments of a new middle class that is connected and consuming. On the other hand, the risk is to induce to populist tendencies, without social and economic sustainability of medium and long-term.
Based on the above, what is happening in Brazil is highly indicative of what may be happening in Latin America in the forthcoming years.
Tendencies for 2016 in Brazil:
GDP ( 4%) ; Inflation 7,2% ; InterR 14,25%; BRL/US 3,6 ; BRL/EU 4,10; UplyR 11%; TrdBal 50bi;
FDI 50bi; IndProd 81%; GrPDebt 68%; NetPDebt 39%; IntRes 375bi; CoConInd 65%; BusCoInd 78%.
Recovery of confidence, return of investments and consequently higher consumption, opening of the economy.
Brazil post crisis recovery reaction is historically stronger. Some companies are preparing for this by starting investments, buying shares and expanding in Latin America. Argentina, Brazil, Chile, again returning to the market.
+ Agribusiness, popular civil construct., infrastructure ( on going+airports), pop. Cons. goods, Energy alt, health care, food
- Turism, insurance, machine & equipments, IT for industries, busses,
+/- automotive, enviromentals, consumer investmens, white and brown line,
Strategy: preparing for recovery 2017. Long term exports. Instable environment, but with very interesting opportunities. Brazil will recover his leadership position in LA.
Ingo Plöger is entrepreneur, engineer economist, adviser to national and international companies and President of IP Desenvolvimento Empresarial e Institucional.