An election hard to predict the winner

Journalist Richard Lapper, director of Financial Times’ Latam Confidential, has presented an analysis of the presidential elections in Brazil during an event offered by EUBrasil Association at the European Parliament in Brussels.

“A very unclear outcome at this point of the presidential elections in Brazil. Very competitive. A quite important election for all sorts of reasons which we can talk about”, said journalist Richard Lapper, director of FT’s Latam Confidential, during a cocktail offered by EUBrasil on 13 October.

Mr Lapper highlighted that the opposition candidate Aécio Neves (PSDB) has delivered a pretty solid campaign but he questioned whether that would be enough to get Mr Neves elected in a runoff against president Dilma Rousseff. “That’s the main question and a very difficult one”, he said.

The journalist highlighted three long term changes in Brazil: consolidation of democracy, macroeconomic stabilisation in the country and the process of social inclusion. “Hyperinflation is now a distant memory for the country. Brazil still has difficulties with inflation, but today inflation is 6%, and not 60, 600 or 6000%”, Mr Lapper said.

He stressed that the economic stability was the work of Fernando Henrique Cardoso’s government, between 1995 and 2002, and added that it was consolidated by former president Luiz Inacio Lula da Silva, who was in power between 2003 and 2010.

“In terms of long-term changes, the social inclusion is another key point in the country and it was made possible by macroeconomic stability. It would be impossible to lift the poor out of poverty without eliminating hyper inflation, but under Luiz Inácio Lula da Silva giant steps forward were made through various measures. Bolsa Familia is very famous and iconic social programme that the Brazilian government has created and has expanded to benefit around like 13 million families at the end of the Lula”.

Mr Lapper recalled that Dilma Rousseff took office aiming to reduce business and capital costs, trying to get productivity moving in Brazil. “Now we have to recognize that the plan did not go as expected. In fact, this is a government that has been dogged by declining growth rates and a real collapse in consumer confidence.”

He reminded that Dilma Rousseff has the support of Brazil’s poorer classes. “In the first round, Dilma got more than 50% in 11 states in the Northeast, the poorest region in the country. Despite the slowing economy, the fact that unemployment is now so low is a great achievement for her to continue to have that support”.

On the possible changes in the country if Aécio Neves wins, Mr Lapper said that the first thing that should happen is a rally in the Brazilian stock market. “Dilma Rousseff has lost investors confidence in both domestic and international markets. Bovespa has risen about 30% from April to the first round of the elections on bets that the opposition would win. Investors bet because they believe that an Aécio Neves’ administration will be more consistent in terms of macroeconomic policies and will have a more market-friendly approach”.