The surprise victory of Jair Bolsonaro in the presidential elections of October 2018 was viewed as a godsend by Brazilian investors. Here was a figure who was committed to deregulation, privatization, corruption fighting, and economic growth at all costs. And even better, his triumph came at the cost of the Workers’ Party which had played the part of Bogeyman for the business community since Lula da Silva was first elected in 2003.

There was only hitch: despite a long tenure in Congress, Bolsonaro had no background in crafting effective legislation or building a consensus behind it.

Turns out that’s actually a problem when governing a diverse country of over 200 million people, or at least this is what growing disillusionment with the president’s early rule would seem to suggest.

Impact

Bolsonaro’s task in office was never going to be easy owing to Brazil’s slew of economic problems: unemployment stands at around 12.7%, inflation is hovering in the 4-5% range (recently hitting a two-year high), growth is projected at a meager 1.24% this year, interest rates are a record-low 6.5% but expected to rise over the next two years, and total public debt is projected to reach 90% by the end of the year (though most of it is domestically held).

Against the backdrop of these various pressures, the Brazilian real has shed over 10% of its value since the start of 2019.

Then there’s a hostile and fractured Chamber of Deputies – another roadblock along the path of realizing the president’s neoliberal overhaul of Brazilian society. It was apparent from the very beginning that Bolsonaro’s tenuous parliamentary coalition was going to make it difficult to push through his reforms. A previous situation report on the presidency highlighted how the fight over the pension system would be particularly telling: if Bolsonaro could temper his more bombastic urges and ‘play nice’ long enough to pass legislation that put the pension system on a more stable long-term footing, it would bode well for the overall policy prospects of his administration. Pension reform is, after all, a relative ‘gimme’ issue in that over six out of ten Brazilians believe it must be done and there’s a clear if not existential fiscal rationale for doing it. The pension system in its present form is bleeding public money, contributing to a 7% budget deficit in 2018.