Synthesis of the Brazilian Economy
The recession worsened in 2015 and still has a long way to go. It is the result of ill-conceived decisions by the Rousseff administration, made worse by the government’s failure to react, because of the main objective of staying in power in the short run. The country’s political cauldron has been heating up quickly with the growing evidence of crimes committed by Lula, combined with the first solid accusations of misdeeds by Dilma. Hence, the degree of uncertainty has risen dramatically, and extreme scenarios such as her impeachment have become more probable than it appeared at the start of the year. Indeed, only such an extreme event such as her impeachment (or improbable resignation) can break the current vicious circle, by which the costs of the recession are aggravating the political picture, which in turn is making it harder to take any action to reverse the growing economic debility. The strategy of muddling through until the elections in 2018 is being undermined by the costs of rising unemployment, inflation and failure of companies, and no longer appears tenable with the crescendo of revelations from the Lava Jato and Zelotes investigations.
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