Brazil May be Braced for a New Leader


The first round of Brazilian presidential elections was held on October 5th and no candidate got more than 50 percent of the votes. As a result, Dilma Rousseff - the current President and Aecio Neves – the leader of center right party will face up on October 26th for the second round. As Brazil’s growth wanes, the elections are dominated by economic agenda which include: tax reforms, foreign trade, inflation and central banks’ independence.

Who is Dilma Rousseff?

Rousseff was born and raised in an upper middle class household in Belo Horizonte. During the Brazilian dictatorship she joined an urban guerrilla group. She was captured and jailed between 1970 and 1972, where she was reportedly tortured. She was one of the founders of the Democratic Labour Party (PDT) in Rio Grande do Sul and later became the Secretary of the Treasury of the City of Porto Alegre. In 2000, Rousseff left the PDT and joined the Workers' Party (PT) where she was invited to become Minister of Energy by President Lula da Silva and later Chief of Staff. She was the first woman in Brazil to become President in 2010. The former president Lula da Silva is one of her main supporters.

Dilma Stands for?

• Rousseff’s strategy focus more on social programmes like “Bolsa Familia” , “Minha Casa", "Minha Vida” supporting directly the poor and less on economic reforms
• She is well known for her ‘anti-inflation policies’ which in fact damaged economic growth. According to the Workers Party, inflation is under control and is expected to come back to the 6.5 percent target in the end of 2014. 
• Under the government of President Dilma Roussef, the central bank has intervened in the foreign exchange markets to protect the currency. During the campaign, she has been saying that “the independence of the central bank means giving to the bankers a great power of decision on interest rates, employment, prices and wages and the central bank should be under the power of the President and the Congress, that are elected by the people”
• Rousseff has been advocating the need to reduce bureaucracy and increase public spending in infrastructure to boost growth. Yet, during her tenure, the public workforce grew to 27.5 percent of total employment in 2013 from 26.25 in 2011.
• Despite the GDP contraction in the first two quarters of 2014, she remains optimistic about the economic recovery. According to the president, the recession is driven by the holidays due to the World Cup and the fall in prices of raw materials. The reduction of the interest rate to stimulate investment was one of the big banners in the first term. Yet, rising inflation may force the central bank to raise the interest rate again. So far, the government started to relieve taxes for the industry and for consumers, trying to stimulating production and consumption.
• Brazil has been under a protectionist regime since president Lula da Silva took power under which Brazilian companies tend to give preference to domestic suppliers even though foreign companies offer better conditions. 
• Rousseff’s agenda strengthens the relationships with Mercosur, Unasur and the Community of Latin America and Caribbean (CELAC). It also puts an emphasis on building stronger relations with African, Asian and the Arab countries. Another promise is to fight for a reform of major international organizations like the UN, the World Bank and the International Monetary Fund.

Brazil May be Braced for a New Leader


Carolina Cunha | Carolina.Cunha@tradingeconomics.com
10/9/2014 12:00:09 PM