Credit: WikiMedia Commons
Bolsonaro Delivers on Promise to Liberate Brazil From Socialism

Bolsonaro Delivers on Promise to Liberate Brazil From Socialism

“We are coming from a very difficult recent past.”

Brazil’s economy is poised to take off under the leadership of President Jair Bolsonaro after years of lackluster growth according to a Thursday Financial Times report.

Bolsonaro, who on his first day in office promised to “liberate” Brazil from the “inverted values” of socialism, has set out to pursue ambitious free market reforms since assuming the presidency. While significant obstacles remain, business leaders are starting to hint at optimism for the future.

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“The last two years have been a period of waiting but now I feel, not only on the part of Brazilian businessmen but also in the international business community, a great desire for this to work,” Neolink International CEO Manoel Baião told the Financial Times.

Marianna Waltz, a managing director for Moody’s, struck a similar tone.

“We are coming from a very difficult recent past with the recession and the various corruption investigations,” Waltz said. “It really seems now we have a more stable environment at least. We are going to see the country grow independent of what happens in politics at least over the next couple of years.”

Due to a business climate plagued by corrupt deals between politicians and the country’s business establishment, Latin America’s largest economy has long been stagnant.

“With the recession and the corruption investigations, all the companies were under pressure. They were forced to adjust, to reduce capex and costs and to reorganize to a new market situation,” Waltz said.

But Waltz believes things are changing.

“Now companies are very well positioned in terms of credit metrics and we are seeing a continuous deleveraging trend and improving liquidity,” Waltz said.

“We think the companies are in a very good situation. Investors are seeing that as well,” she continued.

According to the Financial Times, the optimism has been backed up by impressive earnings reports for many sectors of Brazil’s economy.

Companies listed on São Paulo’s B3 stock exchange reported profits of $45 billion, up 40% from last year.

Mixed state-owned energy companies Petrobras and Eletrobras have benefited from the climate as well, seeing profits more that double since the end of the recession.

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However, much work remains if Brazil wants to continue the economic momentum. Most importantly, Brazil desperately needs to reform its fledgling pension system.

Bolsonaro has sought to rehaul the system with privatization and deregulation, but has faced significant roadblocks to his agenda in Brazil’s congress.

The uncertainty about reform has created wild swings in Brazil’s financial markets. The country’s benchmark Bovespa index rallied over 100,000 points on the heels of good economic news, then fell 97,000 points due to the political fight between Bolsonaro and Congress over the reforms.

Analysts believe the reforms are a crucial piece of continuing Brazil’s economic recovery.

“Investment decisions are waiting for pension reform,” David Beker, chief Brazil economist at Bank of America Merrill Lynch, told Financial Times.

“From my conversations, businesses are willing to wait and eventually deploy more capital. Get the reform done and you will have a transformation,” Beker continued.

Since his stunning election victory last October, Bolsonaro has aimed to take Brazil in a decidedly more right-wing direction. At a joint press conference with President Donald Trump in March, the Brazilian leader echoed Trump’s calls to end socialism and stand up against politically correct ideologies.

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Cover image: Jair Bolsonaro, President Donald Trump. (WikiMedia Commons)

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