It would be bad enough if Brazil’s embattled president, Dilma Rousseff, just had a recession and a plummeting currency to deal with. But in a perfect storm, she also has two corruption investigations, a fractious Congress and impeachment threats on her plate.
Inflation is running at nearly 10 percent, there is a soaring budget deficit and the value of the real has fallen by 32 percent. Average wages are declining and unemployment in Brazil’s six major metropolitan regions was 7.6 percent in September after years of almost full employment. And the bad news keeps on coming: In the first nine months of this year, 657,761 jobs were lost, and 1.5 million jobs are expected to disappear from Brazil’s formal economy in 2015.
Standard & Poor’s has downgraded Brazil’s credit rating to junk status, and Fitch Ratings downgraded Brazil to BBB-, which places it at just a notch above junk. Corruption investigations into both Petrobras, the state-run oil company, and the construction industry already have damaged investor confidence. Dozens of members of Congress are under investigation and important corporate leaders have been jailed.