Synthesis of the Brazilian Economy

BRAZIL ECONOMICS - Report 30 Aug 2021 by Affonso Pastore, Cristina Pinotti and Paula Magalhães

Bolsonaro’s diatribes during August obscured the long-awaited alleviation of the health crisis. The (belated) increased supply of vaccines is now allowing strong expansion of the number of vaccinated people, thus reducing the cycle of contagion and deaths caused by Covid-19. It is possible that within two months, virtually the entire adult population will have received at least the first shot. However, new risks and uncertainties have arisen, involving the Delta variant and the indications of weakening immunity with the passage of time, especially among people who received vaccines at the start of the year. New strategies have started to be tested, and hopes are that booster shots of the current vaccines will be effective, while new vaccines that are more effective against novel viral strains are being developed. While the new from the pandemic battlefront is reason for relief, the political climate is full of bumps in the road. Bolsonaro’s insistence on introducing paper ballots has led to a new level of attacks on democracy, by conditioning the holding of the elections in 2022 on approval of the proposed constitutional amendment (PEC) under consideration by Congress. Smoke-belching tanks rumbling down the Esplanada in Brasília on the day of the floor vote in the Chamber of Deputies did not intimidate either the lawmakers or the population at large, but clearly revealed the nature of the institutional risk facing the country. The defense of democracy is now in the hands of the legislative and judicial branches, society and the press, which has reacted vociferously, and all indications are of hard work ahead. High inflation, unemployment and household indebtedness, with rising interest rates, have reduced the outlook for economic growth and sent the government’s approval ratings tumbling. Feeling cornered, the president continues to create conflicts, damn the effect on the country. The tests in the streets in September, in favor of the government on the 7th and against it on the 12th, will bring new indications of Bolsonaro’s future.

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