• Brazil has been through economic crisis before and may pass this one too, however this time it’s different.
  • Just add political uncertainty to current economic struggle and you may have a bomb ready to cause havoc.
  • It still not done with, add corruption scandal to the mix.

Current government led by Dilma Rousseff who just got victory to lead second term might not even complete her term.

  • According to survey by Datafolha, her rating slumped post-election.
  • As of now 62% Brazilian feels her management to be terrible compared to only 13% voting for excellent.
  • It just jumped from 20% post-election.
  • According to another poll Ibope, rating is far worse. 74% of the people think ofher management asterrible.

Her handling of state owned oil giant Petrobras scandal have sparked outrages among public, who already been upset over current austerity policies of the government.

High inflation and higher portion of foreign debt has led to tough policy mix for Brazil.

  • Contractionary fiscal policy led by austerity and tighter monetary condition thanks to inflation and falling Real (BRL).

Options ahead –

  • Dilma Rousseff might have to resign office should the protests exacerbate. However that might not be an end of it. Crisis could be much deeper, should the parliament dissolve.
  • One potential solution for the current government, could be to bring Lula de Silva back, who has recovered from his throat cancer. He has high rating and approval among public and is being credited with economic boom in Brazil. His comeback might lead to recovery in sentiment.

The material has been provided by InstaForex Company – www.instaforex.com