Why recession won’t affect the result of Brazil’s presidential election

September 2, 2014

J.P. – The Economist, 09/01/2014

Recession is never good news for an administration. And in the run-up to a general election it can be a death knell. With five weeks to go before polling day, Brazil’s opposition must therefore have quietly rejoiced at official data released on August 29th, showing that GDP had dipped by 0.6% in the second quarter and by 0.2% in the first. Yet the dismal figures may not matter as much to electoral calculus as President Dilma Rousseff’s rivals would have hoped. Why is that?

Ms Rousseff blames the contraction on weak global recovery from the 2009 financial crisis, as well as a “surfeit of public holidays” (and thus fewer working days) during the month-long football World Cup in Brazil, which concluded on July 13th. These extra holidays were added by the authorities in a bid to ease pressure on public transport in World Cup host cities. But critics point out that this does not explain the fall in output during the first three months of the year—and the government had previously promised a Copa-related economic bonanza. Of the 45 countries which have reported second-quarter GDP so far, only war-torn Ukraine has fared worse.

Instead, Ms Rouseff’s critics blame the slowdown on flagging business confidence and falling investment as a result of her interventionism, fiscal laxity and failure to address chronic problems: the shoddy infrastructure, tangles of red tape and arguably the world’s most convoluted tax system.

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Brazil’s Silva looks presidential, but not a shoo-in

September 2, 2014

Brian Winter – Reuters, 09/01/2014

Popular environmentalist Marina Silva looks capable of winning Brazil’s presidential election in October but a major campaign gaffe and mounting attacks from other candidates and the media suggest the race is still wide open.

Polls have shown Silva with a lead of about 10 percentage points over President Dilma Rousseff if the Oct. 5 election goes to a runoff, as seems likely. Silva’s meteoric rise has led Brazilian stocks to rally 10 percent in the last three weeks on hopes she would be more business-friendly than Rousseff and help stir a stagnant economy.

In the last week, Silva has successfully begun to address some of the doubts voters have about her – namely, whether she has the personal gravitas and organizational support to govern this continent-sized nation of 200 million people.

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Brazilian President Criticizes Marina Silva’s Political Platform

September 2, 2014
TeleSUR - 09/01/2014
Brazilian President Dilma Rousseff claims that Marina Silva’s industrial policies will negatively impact employment. During a press conference at the Brazilian presidential palace, President Dilma Rousseff criticized the policies of her opponent Marina Silva on Sunday leading up to the presidential elections in October, claiming that Silva’s political platform would greatly hurt the country’s domestic industrial sector and could potentially lead to widespread unemployment.

“After reviewing her political proposals, I am very concerned particularly with regards to the creation of employment and industrial policy,” Rousseff said.

In particular, Rousseff questioned her presidential candidate rival’s proposal with regards to providing fiscal incentives to certain industrial sectors, stating that such measures “are only effective in particular cases not as general rule of thumb.”

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Rival Brazil Candidates Train Fire on Silva After Poll Rise

September 2, 2014

Raymond Colitt and Anna Edgerton – Bloomberg, 09/01/2014

Marina Silva’s rise to the top of opinion polls in Brazil’s presidential race has forced her rivals to step up criticism of her proposals on such subjects as energy, gay rights and economic policy.

President Dilma Rousseff, whose lead over Silva vanished in less than two weeks, said in a televised debate today the former environment minister hasn’t said how she would finance increased spending on public services. Senator Aecio Neves, who trails third in polls, mocked Silva’s change in posture on economic policy, saying her proposals were contradictory.

With discourse that taps into widespread discontent and positions that are friendly to business and investors, Silva has become the focal point of the campaign since she entered the race Aug. 20. Having presented her government platform on Aug. 29, she is now subject to scrutiny by media and rivals who will test her resilience in polls, said David Fleischer, a University of Brasilia professor who follows Brazilian politics.

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Market Reduces Brazil Growth Forecast After Weak 2Q

September 2, 2014

Kenneth Rapoza – Forbes, 09/01/2014

Brazil’s back-to-back economic contraction in the first and second quarters now has the nation’s top banks reducing their year-ending GDP forecast to a whopping 0.52%. This is the 14th consecutive week that economists reduced their forecasts for Brazil’s economy.

Last week, the Central Bank’s Focus survey had GDP growth ending 2014 at 0.7%. The survey comes out every Monday.

The decline comes on the heels of a poor showing in the second quarter. The economy contracted 0.6% from the first quarter, which had also contracted, putting Brazil in a technical recession. Compared with the second quarter of 2013, Brazil’s GDP slipped 0.9%.

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Recession puts brake on Brazil’s once-booming car industry

September 2, 2014

Joe Leahy – Financial Times, 08/31/2014

Workers in Brazil’s automotive industry have become accustomed to seeing their sector break new records, with Latin America’s biggest country becoming the fourth largest car producer in the world over the past decade.

But last week, 930 employees at General Motors’ plant in São José dos Campos near São Paulo were forced to accept a five-month “lay-off” or suspension to avoid outright dismissals.

The country’s weak economy, which was revealed on Friday to have slipped into a technical recession in the second quarter, is undermining the industry, leading it to report its first annual fall in car sales in a decade last year – a trend that has continued into 2014.

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Brazil Government Primary Deficit Moves Farther From Target

August 29, 2014

Paulo Trevisani – The Wall Street Journal, 8/29/2014

The Brazilian government moved further away from its annual fiscal target with a primary deficit in July, according to data released by the central bank Friday.

The total government, including central, state and municipal levels, recorded a primary deficit of 4.7 billion reis ($2.1 billion) in July. In June, the result was negative as well, at 2.1 billion reis.

With July’s results, this year’s accumulated primary result is a surplus of 24.7 billion reis, comparing with a 99 billion reis annual target.

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