The new Brazilian government led by Michel Temer, the former deputy of the suspended president, Dilma Rousseff, has minimal room for error in the weeks and months ahead, argues Wikistrat’s Oren Kesler in this report. The public’s expectations are high and the government is expected to provide impossibly immediate solutions to deep problems.
Many investors consider the next ninety days to be crucial. The new government needs to issue and execute economic reforms to cut the deficit — a task the Rousseff government was neither willing nor able to tackle — and privatize state-owned enterprises, such as hydroelectric dams, airports, marine ports, insurance companies and the postal services.
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- The next 90 days are crucial for the government to show progress.
- Public-sector strikes are expected to intensify over the next three to six months.
- The government is very likely to raise income taxes. Nevertheless, it is highly possible that no new taxes will be placed on foreign capital entering Brazil.
- Investors should expect a period of 30 to 60 days in which the Brazilian stock exchange shows positive signs.
- Brazil’s currency is likely to continue to lose value over the next 12 months, as inflation is likely to rise.
In the media
This report was adapted for publication in The National Interest.
Rousseff’s impeachment might have brought a wave of optimism to Brazil’s business sector, but it has not solved any of the problems the country is currently facing. The next ninety days are crucial in this regard.
Wikistrat Group Leader