Why this is important to Wisconsin businesses: Signs of recovery since the impeached president left office
According to Brian Winter, the chief director of the American Quarterly, “If history is any guide, Brazil’s Soccer Olympic Gold may be remembered as a turning point in the crisis.”
In an interesting perspective, Winter sees parallels between the trajectories of the Brazilian economy and the performance of the Brazilian soccer league, pointing out how those seemingly unrelated events ended up connected by the mood of the country and its impact on the economy.
A well-placed penalty kick cannot magically end inflation and all the problems Brazil faces, but it does boost national self-esteem. In a country that is still very much driven by the domestic economy, getting confidence back is an auspicious sign.
The signs are still tentative, but manufacturers are investing again: imports of capital goods were 18 percent higher in dollar terms in June than in the same month last year, the first year-over-year rise since September 2014.
Industrial production increased in June for the fourth consecutive month after two years of nearly uninterrupted decline. Firms’ stocks of unsold goods are starting to shrink, and the number of trucks on the roads has stopped falling.
Firms are not yet ready to resume hiring, but firings have slowed. This is making consumers less worried; one consumer-confidence index rose for the third straight month in July. After repeatedly reducing its growth forecasts, the IMF recently revised upward its projection for Brazil’s GDP next year. It now expects a modest expansion of 0.5 percent in 2017, while in April the fund was predicting no growth. Some private-sector economists expect the growth rate to be as high as 2 percent next year.
Much of the encouragement is coming from Brasília, with the beginning of the impeachment trial of Dilma Rousseff on Aug. 25. If Rousseff is impeached, the vice president, Michel Temer, who has been acting president since May, would then serve out the remaining 28 months of her term.
Spirits have lifted and the stock market has boomed since Temer took office. More pro-business than Rousseff and more skilled in dealing with the congress, Temer promises confidence-boosting reforms.
Although none of this means that the economy is yet in good shape, coincidentally or not, when Brazil won its first-ever Olympic Gold in soccer, it provided a depressed nation with its most joyous collective moment in years, consolidating a nationwide belief that, against all odds, the Rio Olympics were a success, and the cloud that had hovered over Brazil is starting to dissipate.