Unpopular and isolated, Temer’s administration has lost power
If discussions in Brazil’s Congress had already been moving slowly due to the worsening political crisis, the trend in coming weeks is for the legislative agenda to grind even further to a halt due to June festivities in the Northeast where, traditionally, celebrations contribute to a decrease in parliamentarians’ presence in the House and Senate. In addition, not only was last week the kickoff of the 2018 FIFA World Cup, during which several days off are scheduled for business when Brazil’s national team plays, but the legislative branch parliamentary recess will run from July 17 through July 30.
Facing historic unpopularity and almost nonexistent congressional support, President Michel Temer has been showing signs of a premature loss of power over his administration with six months still to go. Temer has shown he has no control over political forces and as a result, several pressure groups have had some success in trying to extract benefits for specific sectors. The government will face increasing pressure in trying to curb these movements at a time when the president has lost his political capital, and there is no expectation that he will have a successor in the post-election government.
Losses resulting from the truckers’ strike amount to BRL $ 15.9 billion, equivalent to 0.2% of the Gross Domestic Product (GDP), with industry affected the most. As a result of the scarcity of food and other inputs, market forecasts for the Broad Consumer Price Index (IPCA) rose for the fourth week in a row, reaching 3.82% in 2018. In addition to the immediate negative effects on industrial production and high food prices, the strike led to an increase in uncertainty and has contributed to the fall in corporate stock prices and the skyrocketing dollar. The decline in investor confidence is a reflection of increased risk
The trade war between the U.S. and China overturned stock exchanges in several countries and is expected to have a negative impact on Brazil, both in the financial markets, if the U.S. again plans to raise interest rates, and in exports, especially those linked to agribusiness.
The views and opinions expressed in The Pulse are PATRI’s own and do not necessarily reflect the views and opinions of the Brazil-U.S. Business Council. For additional information please email Carlos Eduardo Lins da Silva, at firstname.lastname@example.org.More Testimonials