Can Rouss­eff rise to the chal­lenge?

Financial Mirror (Cyprus) - - FRONT PAGE -

Sun­day’s pas­sion­ately con­tested Pres­i­den­tial elec­tion in Brazil was won by the slimmest mar­gin the coun­try has seen since 1945. With just 51.6% of the vote, cur­rent Work­ers’ Party Pres­i­dent, Dilma Rouss­eff, was re-elected over the cen­trist can­di­date Ae­cio Neves, in a di­vi­sive vote that pit­ted the coun­try’s poor against con­ser­va­tives frus­trated with the stalling econ­omy.

While the half of the pop­u­la­tion who have ben­e­fited from Rouss­eff’s so­cial ben­e­fits are re­joic­ing, many in­vestors are dis­mayed at the out­come.

Brazil’s first fe­male Pres­i­dent suc­cess­fully ex­panded wel­fare pro­grammes and achieved near record-low lev­els of un­em­ploy­ment, but she couldn’t stop the econ­omy fall­ing into re­ces­sion in the first half of 2014; many an­a­lysts an­tic­i­pate no growth this year.

Such is the power of pes­simistic in­vestor sen­ti­ment, when opin­ion polls pointed in Rouss­eff’s favour in the run up to the elec­tion, Brazil’s stock mar­ket and cur­rency took a hit. The coun­try’s main in­dex, the Ibovespa, which has lost 25% since she came to power, fell 6.8% last week.

Although two third of Brazil­ians polled were in favour of change, and mil­lions joined last year’s street protests, Naves failed to per­suade the majority that he was the right leader for re­form. So, can Rouss­eff save the world’s sev­enth-largest econ­omy and prove her crit­ics wrong? Can she put right stalling growth? Ac­cept­ing vic­tory, she ac­knowl­edged the chal­lenge to unify the coun­try, “Some­times in his­tory, nar­row re­sults pro­duced much stronger and faster changes than very wide vic­to­ries… I want to be a much bet­ter pres­i­dent than I have been up to now.”

Rouss­eff is acutely aware that she has se­cured vic­tory by the thinnest pos­si­ble thread and that Brazil­ians are now look­ing to her to prove her worth. In the past, she has blamed Brazil’s re­ces­sion on the global slow­down, but now it would be more ap­pro­pri­ate to take re­spon­si­bil­ity.

Yes, the prices of com­modi­ties, ac­count­ing for about half of the coun­try’s ex­ports, are down glob­ally, but that alone does not ex­plain why Brazil has fared worse than the other BRIC coun­tries and Latin Amer­ica’s sec­ond big­gest econ­omy, Mex­ico. In re­al­ity, the business cli­mate and in­vestor con­fi­dence are also af­fected by the rigid labour rules and com­plex tax sys­tem, com­plete with cor­rup­tion and un­der­de­vel­oped pub­lic in­fras­truc­tures.

Only with a sense of re­spon­si­bil­ity can ac­tion and change follow. Rouss­eff has promised to fight in­fla­tion and cor­rup­tion, and to take mea­sures to boost growth. She will also ap­point a new Fi­nance Min­is­ter to over­see the econ­omy. The next quar­ter will set the scene for her sec­ond term in of­fice. Will the Pres­i­dent’s poli­cies prove that she is as com­mit­ted to fis­cal progress as she says? Cau­tious in­vestors will cer­tainly be de­bat­ing this as they spec­u­late about Brazil’s 2015 out­look.

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.