LABS Sessions: Talking About Brazil’s Current Economic and Political Situation
A political scientist, an economist, and an internationalist getting together to talk about the current political and economic landscape of Brazil after the election of far-right presidential candidate Jair Bolsonaro.
That was the highlight of the first edition of LABS Sessions, an event we started in order to foster the discussion about topics connected to the Latin American business landscape.
Besides the presence of renowned experts, the meet-up, that took place this Monday, also featured the release of an exclusive study about WhatsApp Usage in Brazil, presented by LABS market intelligence specialist, Priscila Fenelon.
Bringing forward for discussion one of the most controversial matters in Brazil at the moment, the event brought to the table arguments from different points of view.
And, of course, we couldn’t miss the opportunity to share all the main highlights of the first LABS Sessions with you. Here’s what we got.
Whatsapp: Brazil’s Sweetheart
WhatsApp played a determining role in Brazil’s latest general elections. With more than 120 million users in Brazil, a nation of over 200 million, the smartphone messaging application is an important part of the day-to-day life of Brazilians, and politicians saw in it an opportunity. Fake news started to be spread through the social app, and the matter gained global repercussion.
In order to understand the usage of WhatsApp in Brazil, LABS conducted a study that talks not only about users’ behavior on the platform but also about the bright side of the application for companies in Brazil.
The Crave for Change and The Election of Bolsonaro
Political scientist Emerson Cervi began the debate by stating that the Brazilian population’s desire for a major political change was one of the major reasons for the presidential election victory of Jair Bolsonaro, from the PSL party.
The expert gives a retrospective of Brazil’s political trajectory and recalls the 1989 elections in Brazil, the first direct one after the end of the military regime.
Cervi said that back then, the search for change was also determining, when the great parties in the presidential race were the PMDB, who presented the candidacy of Ulysses Guimarães, who was against the dictatorship, and the PDS, representing the continuity of the military government.
Brazilians’ reluctance concerning big parties was so expressive that it was precisely the smaller parties that won the most of the votes, leading to the election of PRN’s Fernando Collor. This election also had the Workers Party (PT) founder and today the most popular politician in Brazil, Lula, in his first relevant appearance on the national political scene. His party conquered 15% of the votes, which, considering the proportions of the party at the time, was a significant amount.
Explaining this scenario, the scientist concluded that Brazil has already gone through this. He also said that until April, he believed that Bolsonaro was not viable to win. “When they arrested Lula, he polarized. After that, I came to believe that the candidacy was viable, but I did not think it would be possible for him to have 50% of the votes”. For Cervi, what led the electorate to vote for Bolsonaro, was the lack of an alternative. The Brazilian voter wanted an outsider“.
After the impact of the Lava Jato operation (an ongoing criminal investigation that has led to prison sentences for top executives and politicians in Brazil, including Lula), the political system as a whole started to be questioned by the population, generating a crisis.
According to the political scientist, Bolsonaro knew how to take advantage of this moment in his favor, which explains the current political scene. Returning to the theme of the importance of the WhatsApp as a political tool and the influence that the tool had, Cervi stated that we need to be careful with technological determinism, since technology does not shape human behavior. According to him, Bolsonaro’s team was able to use the tool very well, .
The expert says that the politician challenges traditional media, positioning himself as a “digital influencer” for his followers in social networks and discrediting large news outlets, tactics that are remarkably similar to the ones used by Donald Trump. For Cervi, these moves might still have a great impact on Brazilian communication.
How is the Brazilian political scenario being seen abroad?
According to the internationalist Rafael Gallo, one word defines the election of Bolsonaro: uncertainty. For the expert, “it’s a very challenging and complicated issue,” because the president-elect’s rhetoric is not stable enough to figure out what his government’s line will really be like.
He used the change of the Israeli embassy as an example. The agribusiness bench is one of the great pillars for the government and the sector is the “girl of the eyes in Brazil” according to Gallo, who completed affirming that “15% of Brazilian agribusiness exports go to the Middle East”, therefore creating ailments with the region might not be the best scenario. “I really hope it’s a rhetorical act,” concluded.
For him, waiting for the beginning of Jair Bolsonaro’s government is the best alternative to really understand what paths will be taken concerning international relations. However, the internationalist stated that Bolsonaro’s behavior so far indicates that many of his statements are merely rhetorical positions and are not reflected in practice.
USA vs. China: What is the position of Brazil in the conflict of giants?
Economist Eduardo Mattos pointed out that although, economically speaking, “today [Brazil] has a dangerous position in terms of international exposure,” there is also an asset that helps Brazil keep the country more protected: a relatively closed economy.
According to the economist, the big problem today is that “China today has the largest GDP in the world on Purchasing Power Parity (PPP), and our [Brazil] alliances will be very closely linked to the US government.” However, because of the Brazilian economic model, even though risks exist, the nation can protect itself in some matters, meaning that Brazil is not totally vulnerable.
Inflation, US Dollar exchange rates and Bolsonaro
According to the economist, it is estimated that Brazil will continue in a deficit situation, that is, with expending more than collecting. Even so, the economist indicates a positive scenario in this regard stating that since “Brazil’s inflation is now good, Bolsonaro indicated that he intends to keep the Central Bank of Brazil autonomous. ”
Concerning US Dollar exchange rates, the economist signals that there are numerous factors that influence the variation, among them is productivity. “If you are not so productive, your product will get more expensive in the end. Exchange is a way of leveling different productivities”, said Mattos.
The economist also reveals another important aspect that is determining the current exchange rate variation in Brazil: politics, as, according to the current indicators, “the speculative part is happy with the entry of Bolsonaro.”
Therefore, in relation to productivity, Mattos believes that we are at a disadvantage compared to the United States, but on the other hand the election of Bolsonaro revealed other positive aspects concerning the market.
“Venezualization” of Brazil. Is it possible?
One of the main arguments that contributed to the election of Bolsonaro, was that the leftist parties would turn brazil into a new Venezuela, which is facing a crisis of unprecedented proportions.
Emerson Cervi said that there isn’t much risk, especially regarding the political aspects explaining that “what happened there, the source of the whole crisis, was the inability of the political opposition to stand against [in a proper way]”. He added that the Venezuelan opposition did not gain a political veneer and was very warlike, “contrary to what happens in Brazil, where the Brazilian opposition is even more fragmented than the government itself”, said.
A point of view also shared by the internationalist Rafael Gallo, who is categorical in affirming that “there is no risk of Brazil turning into Venezuela”, as the two nations have different contexts and issues.
Be it in political, economic or international relations, there is nothing concrete about which paths the Bolsonaro government will definitely take.
What is certain is that the Brazilian economic model allows the nation to have some stability in moments of crisis and that although this election represents a radical political change, Brazil has faced similar scenarios previously, meaning that the election of Jair Bolsonaro shouldn’t be totally alarming for the country.
Brazil is going through a period of change, but it has the potential to face this transformation in the best possible way.