Goodbye, Dilma. Hello, Michel Temer.
On August 31, Brazilian President Dilma Rousseff was impeached on charges of breaking budgetary laws, ending nine months of political infighting. The Brazilian Senate voted 61-20 to permanently remove her from her presidential post. Rousseff’s former vice president, Michel Temer, led the impeachment process and has assumed the presidential duties.
This week we will look at the current political landscape of Brazil under the new president. We will briefly describe the country’s recent political history and look at the specifics of Brazil’s economic development. We will discuss the conditions that led to the impeachment and the new president’s possible policy path. As usual, we will conclude with market ramifications.
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Brazil’s population of more than 200 million makes it the fifth largest country in the world in terms of population. Population growth has been rapid as the absolute number has doubled over the past 30 years. According to IMF data, Brazil was the ninth largest country in terms of nominal GDP in 2015.
Brazil is still very new to the international markets as well as to democracy. The country was ruled by the military from 1964 to 1985. During this time, civil rights were severely repressed while the military tried to implement economic reform. In 1985, the military peacefully ceded power to civilian rulers. The constitution was ratified in 1988 and the country held its first democratic election in 1989 with great enthusiasm. The new government was able to get inflation under control through extensive price freezes, and its new currency was introduced in 1994.
The Workers’ Party, which is moderately left-wing, first came to power in 2002 when Luiz Inacio Lula da Silva (known as Lula) won a resounding victory. Lula remains popular to this day, aided by the booming economy experienced during his two terms. Dilma Rousseff, also a member of the Workers’ Party, was elected president in 2010 largely on the back of Lula’s popularity. Rousseff’s second presidential term began in 2014.
Rousseff has been involved in left-wing politics for most of her political career. She fought against the military dictatorship alongside the Marxist movement and was jailed and tortured by the regime. She was one of the founders of the Democratic Labor Party, serving in several regional positions. In 2000, she left the party after an internal dispute and joined the Workers’ Party. She became Brazil’s energy minister before running for president in 2010.
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