Brazil Elections: Economic challenges ahead of polls on Sunday

Global Business

Brazil Elections: Economic challenges ahead of polls on Sunday

A classic left-right matchup may be taking shape in Brazil’s presidential elections. Latest polls predict a second-round showdown between the far-right candidate, former army captain Jair Bolsonaro, and leftist Fernando Haddad, who replaced Lula da Silva on the Worker’s Party ticket after the former president was barred from running.

 CGTN’s Paulo Cabral has more.

As Brazil continues the struggle to leave its economic crisis behind – the business community is closely following the coming presidential election. The uncertainties ahead have already brought instability to the currency and stock markets in recent weeks.  But the long term question — is whether the new government will put the country back on track for economic growth.

“A commitment to economic stability, by keeping inflation and government expenses in check, and commitment to keeping a floating exchanging rate and to pushing a reform agenda,” said Eduardo Velho, Chief Economist at GO Associates.

“So, the market needs to know if the next president will have an independent economic team to do this or if there will be much government interference. Also whether the next president will have the political support he needs to push with the pension system reform,” he said.

The two leading candidates both say the country’s pension system is in need of reform. But former São Paulo mayor Fernando Haddad and his leftist Workers Party – with a strong trade union base – has been reluctant to commit to specific measures, like setting a minimum age for retirement.

Among market agents there’s a clear preference for the far-right candidate, former army captain Jair Bolsonaro – mainly because of the pro-market economist serving as his key adviser, Paulo Guedes. Bolsonaro often says he’s not prepared to discuss the economy when questioned — and defers to the man he says would be his “super minister” if elected.

But most analysts say some sort of reform is inevitable – and some say a left-winger may be in better position to get it done.

“They can do the reforms with much more easy than a right wing candidate. It’s harder for someone like Bolsonaro or Alckmin to fight against the corporations, the trade unions, it’s more difficult,” said Spinelli Brokerage Chief Economist Andre Perfeito, adding it “sounds like its easier for someone like Haddad or Ciro Gomes to do the that. But that’s my opinion, the general opinion of the market is not this one. They want someone very committed with the reform.” 

The sluggish economy is a big concern not only in the business community but for most Brazilians. Unemployment remains high at 12.4 percent. And economic growth for this year is expected to be below one and a half-percent. No matter who gets elected, it’s clear there’s urgent work to be done to improve the outlook for 2019 and beyond.

CGTN’s Rachelle Akuffo spoke with Raquel Krahenbuhl, Washington Correspondent for GloboNews TV about Brazil’s upcoming elections and economic expectations.