In Brazil, many captains of finance are unwilling to risk upsetting the government by expressing their concerns publicly about the country’s economic crisis. Don’t put Jose Olympio Pereira in that group.
Just seconds into an interview in Sao Paulo last week, the CEO of Credit Suisse Group AG’s Brazil unit made his views crystal clear when, in response to a question about the state of affairs in the country, he replied: “we are very bad.” And when he says “very bad,” he means it. Not only are 2015 and 2016 lost years for the economy, according to Pereira, but the bust could extend through 2017 and even possibly into 2018.
Pereira’s not some newbie foreign executive who was just dropped in to oversee the bank’s local operations. He’s been a fixture in Brazilian banking since the mid-1980s, when he got his start under Jorge Paulo Lemann, the country’s richest man, at Banco Garantia in Rio de Janeiro. One key thing he’s learned over the past three decades is that if policy makers and congressmen in Brasilia don’t feel the full brunt of the crisis, they won’t implement the tough measures — “massive” spending cuts, more flexible labor laws — needed to curb the deficit, regain investor confidence and pull the economy out of its funk. That’s precisely the situation he sees today.