Synthesis of the Brazilian Economy
The country’s political scenario is still uncertain and filled with risks. Targeted by a denunciation of passive corruption and politically mutilated by the devastating conversation with Joesley Batista, President Temer has channeled all his efforts into producing a legal defense that can convince Congress not to oust him. But the political cost, from the standpoint of lawmakers, of supporting a president with one-digit approval ratings has been undermining the strategy, increasing the chance he will be deposed. It’s likely that the labor law reform will be approved, but the chances of passage of the pension system reform, which requires a supermajority and faces strong popular resistance, are fading by the day. Despite all this, the good external winds, fruit of the high liquidity in the global economy and declining risks in the central countries, have been reducing the economic impacts of the political crisis. Without a sharp currency depreciation and with economic activity still very weak, inflation is falling steeply, giving the Central Bank the freedom to continue cutting the interest rate.
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