EUBrasil Association is confident that the team of the re-elected president has enough experience to make the robust changes in economic and monetary policies needed in order to ensure greater credibility for both domestic and foreign investors. The association hopes for more Brazil in Europe and more Europe in Brazil.
The president of EUBrasil, Luigi Gambardella, congratulates the Brazilians for their choice, respecting the PT governments for the wide range of social protection policies; the income transfer from Bolsa Família, the public universities quota system, the private university credit, the vigorous minimum wage policy and the improved access to credit.
EUBrasil believes, however, that from the 1st of January 2015 the re-elected president will face a series of difficult decisions. It will have to address not only the issue of health care but also public safety and tax reform. In our opinion, the biggest challenge will be to control inflation and to make the significant investments that the country needs to grow.
President Rousseff herself has already admitted more than once that the amount of investment in infrastructure in the country is below what is necessary. The Brazilian Confederation of Transport (CNT) has recently released an investment plan that sets in R$ 987 billion the amount of money needed for two thousand projects. CNT assessed that there are conservation problems in 63.8% of 96.7 thousand kilometres of state and federal roadways.”A credibility shock is needed to attract partnerships as the country absolutely lacks investments of over 18% of GDP in order to grow and has a very low level of savings”, says Gambardella.
Gambardella also expects that the re-elected president resume negotiations between the European Union and Mercosur as she promised during her campaign.
In a meeting with German chancellor Angela Merkel in June, president Rousseff reaffirmed Brazil’s and Mercosur’s determination to press ahead with negotiations for a trade agreement with the European Union that will allow the country to enlarge and diversify its flow of commerce. Those were president Rousseff own words, recalls Gambardella.
“We need more Brazil in Europe and Europe in Brazil. A free trade agreement between EU and Mercosur could free up welfare gains both for consumers and businesses. Thanks to the EU-Mercosur agreement, trade between the regions could increase significantly. This could be followed by enhanced investment in both directions. Tariffs and non-tariff barriers are holding back significant amounts of trade and investments and depriving consumers and exporters of considerable benefits”, according to Gambardella.
Since 2000, the EU and Mercosur have been negotiating an association that later included a free trade agreement, but the dialogue stagnated in 2010 and since it has restarted, in 2010, it has been advancing with extreme slowness.
“The toughness of the political campaign has contributed to an environment of strong polarisation among the electorate favouring extreme rejection attitudes from both sides, and this can create difficulties and divisions when it comes to promote and apply the policies needed to relaunch sustainable growth in the country. For that reason, we hope that the president elected is able to reestablish concord and consensus, fundamental to avoid the paralysis of important decisions and initiatives that will have to be implemented”, says Alfredo Valladão, president of EUBrasil Advisory Board.
Ms Rousseff will govern the country until 2016, when her party, PT, will have completed 16 years in government. Never before, in Brazil’s democratic history a single party has governed the country for so long.