In charts: what is bothering the Brazilians?
About 85 per cent of voters think the country is heading in the wrong direction A Brazilian soldier patrols
In less than a week, Brazil will vote in the most uncertain presidential election since its return to democracy in 1985. In a nation that has become sharply divided, opinion polls suggest the election will come down to a second-round stand-off between the far-right Jair Bolsonaro and leftist Fernando Haddad.
Brazil was once a high-flying emerging economy — the “B” in the Brics label. But a corruption scandal centred on Petrobras, the state-owned oil company, disgust with the political class, appalling levels of violence, a fragile recovery after the country’s worst recession in modern history and rising public spending have taken their toll on growth prospects and the optimism of its people.
Economists agree Brazil needs reforms, including an overhaul of the generous pensions system, to sustain economic growth and make its debt sustainable. But many doubt that any of the contenders would do what is necessary.
About 85 per cent of Brazilians feel that their country is going in the wrong direction — the highest proportion in the 27 largest economies surveyed by Ipsos Mori. Here is why:
BRAZIL IS PLAGUED BY CORRUPTION Brazil has been engulfed by the Lava Jato (Car Wash) corruption scandal, which has provoked anti-establishment anger. In Brazil, perceptions of corruption have worsened more than in other Latin American countries, according to Transparency International. The country ranks at the bottom of 137 countries tracked by the World Economic Forum for trust in politicians. It languishes in the bottom 10 for perceptions of the illicit use of public funds, efficiency of government spending, transparency of government policymaking and the business cost of crime and violence. This is below any other neighbouring country except Venezuela, which is a failing state.
Homicide is on the rise Mr Bolsonaro has positioned himself as the “law and order” candidate before an audience that is fed up with crime and violence: the number of homicides rose nearly 10 per cent to almost 64,000 in 2017. This is the highest number since records began in 2008, according to the Brazilian Forum of Public Security. “His ultra-conservative views on crime control are reminiscent of another headline-grabbing hardliner, the president of the Philippines, Rodrigo Duterte,” said Robert Muggah, director at the Igarapé Institute, a security think-tank in Rio de Janeiro. “Bolsonaro’s first priority is to scale-up repressive approaches to crime fighting.”
Economic and social progress has stalled Riding high on a commodity boom, coupled with redistributive policies, Brazil’s economic and social progress between 2003 and 2014 lifted 29m people out of poverty and saw inequality drop significantly, according to the World Bank. But the rate of reduction of poverty and inequality has stagnated since 2015. The economy lost about 10 per cent of its output between the third quarter of 2013 and the second quarter of 2017. Latin America’s largest economy continues to limp out of its worst recession ever recorded.
More than 6m people became unemployed in Brazil in the four years to July. Last year about 12 per cent of the labour force was unemployed — this is the highest rate in more than 30 years, according to the IMF fiscal monitor. The number of jobseekers is declining but still hovers around an alarming 12 per cent a month.
Deforestation is on the rise Brazil, home to the largest chunk of the Amazon rainforest, made great progress in reducing deforestation up to 2012. In that year, about 23,000 sq km fewer of forest were cut compared to eight years before. That trend has reversed. Environmentalists fear deforestation could rise faster if Mr Bolsonaro wins the election. He has threatened to withdraw from the Paris climate accord in an echo of US President Donald Trump.
Brazil’s fiscal deficit is worrying Brazil’s fiscal balance has deteriorated dramatically in the past five years. The fiscal deficit rose from 2 per cent of GDP in 2012 to 10 per cent in 2015. This year it is expected to hover around 8 per cent — nearly 3 percentage points higher than the average of Latin America. The next president will face a fiscal burden that will probably define his or her term in office.
Brazil’s economic crisis meant a fall in government revenues, while spending continued to increase. Social transfers through welfare have increased spending but “only a few of them reach the poor”, wrote the OECD in its latest report. The reform of Brazil’s “bloated pension system is long overdue”, said Angela Bouzanis of Focus Economics. Brazil spends about 12 per cent of its GDP on pensions. Peru, Mexico and Chile have a similar share of their populations aged 65 or over but spend only about 2 per cent of their GDP on pensions.
“Without reform, pension expenditure will more than double,” warns the OECD. With 82 per cent of pension spending going to the richest 60 per cent, the lack of reform will mean rising imbalances and inequality. Cassiana Fernandez, an economist at JPMorgan, said: “Without the approval of pension reform next year, we believe that the risk of a financial crisis in Brazil would rise substantially.” |
