try to straighten out a weakened economy

First modification: 10/01/2022 – 18:48

Gabriel Giménez Roche, researcher, associate professor of economics at Neoma Business School, responded to questions from Pauline Gleize of RFI

RFI: What is the economic balance of outgoing President Jair Bolsonaro?

Gabriel Gimenez Roche: Your balance sheet can be summed up in one word: stagnation. Indeed, he promised many things, reforms, privatizations, tax cuts, and structural reforms, with the aim of attracting foreign capital and boosting the economy. but in reality he did very little.

In the cases of privatization and tax cuts, he did almost nothing. Administratively, he made rather cosmetic reforms. He slightly accelerated the processes, for example, of closing or opening companies. However, he did not do much more. There were also adjustments at the level of social programs. For example, what used to be called “Bolsa familia”, that is, the family benefit, is now called “Auxilio Brasil”. But it still has the same nature as the program before, they just changed the name. The program is endowed with a little more money. There have been many accusations of electoral clientelism, although that is up for debate.

In any case, structurally, there was no change. Is this one of the big problems in Brazil? Government after government, the political color matters little, the governors do not make the necessary structural reforms. then, frequently, they benefit from or follow the international situation, especially the latter.

RFI: More than 33 million people suffer from hunger in Brazil, an increase of 73% compared to 2020, according to the Brazilian Network on Food Security. Should this be attributed to the world economic crisis or to the management of Jair Bolsonaro?

A little to both. On the one hand, it is true that the crisis appeared in the middle of his term, so we do not know if he would have made the reforms or not after 2019. But we saw how he managed the Covid-19 crisis, with many boasts, and that I do not help. What he did was make some investors flee who could have gone to Brazil. I think it is possible to question his management of the pandemic. Many businesses closed, and there was not much support for the economy.

It should also not be forgotten that Brazil is an exporter of raw materials, be they agricultural or mineral products, and demand decreased a lot during Covid-19. Even if demand has recovered, the problem of logistics value chains that have been relatively downgraded remains. So, in fact, it’s a combination of the two.

RFI What will be the economic challenges for the future president?

The country is not facing the same situation as during Lula’s mandate, for example. So there was a super cycle for raw materials, with a strong demand for the raw materials that Brazil exported, and there was a certain global geopolitical stability. Now there will be no such context, there will be a world with many countries that will suffer from inflation and will have energy problems. Consequently, world demand will be a bit depressed, interest rates will be very high.

Since at least 2015, Brazil has registered an unemployment rate of 14%. There is talk of an inflation that is growing above 7 percent, even more linked to the conflict in Ukraine; a public debt that happily exceeds 100 percent of GDP. So the country will have more difficulty finding cheap money abroad. It cannot be said that there is still a super cycle of raw materials: even though the demand exists, the logistics chains have not recovered. There is also a concern, Brazil depends on China in terms of imports, especially industrial goods, and China also has its own problems at the industrial level.

So, it will be very complicated, although there are many people who talk about a return of Lula. They forget that Lula, in terms of structural reforms, did nothing at the time of her either. Let’s say that she benefited from a period of conjunctural well-being. And now that situation will no longer be present. So, the president does not matter, even if he is proactive in terms of reforms, he will be confronted with a much more difficult situation.