On October 28th, Jair Bolsonaro of Brazil’s Social Liberal Party (PSL) defeated Fernando Haddad of the Worker’s Party (PT).
What Businesses Should Know About Brazil’s New President
On October 28th Jair Bolsonaro of Brazil’s Social Liberal Party (PSL) defeated Fernando Haddad of the Worker’s Party (PT). The outcome of this election, with Bolsonaro, a candidate coming from the far-right of the political spectrum picking up 55% of the vote, can largely be contributed to three factors: Brazil’s lethargic and largely jobless economic recovery, a decline in public security, and a strong and sustained anti-corruption wave first instigated by the unprecedented Lava Jato investigation. To understand where Brazil’s economy will go following the election of Jair Bolsonaro, it’s necessary to first understand why the economic recovery to date has been so lethargic. This can largely be laid at the feet of one monumental failure of the current government under President Michel Temer: the lack of a comprehensive pension reform. Jair Bolsonaro was the only candidate in the run-off election that supported a reform of the pension system, which may be why, despite his bombastic rhetoric on campaign, yields on Brazil ten-year treasuries fell by more than two percentage points and the currency ratio appreciated from 4.1 (Brazilian real to USD) to 3.62, between September and the day following the final electoral outcomes.