Given the macroeconomic environment Brazil continues to be very weak.
“The policies that have been in place during the last three to four years clearly haven’t worked, and put Brazil into its worst recession since the 1930’s,” added Landers.
“GDP was down almost 4% last year, and close to 2 million jobs were lost.”
Brazil suffered 2-3% inflation per day when Landers lived in Brazil as a child, he remembered.
“we’re not back to those levels of hyperinflation, but it’s a slippery slope. We saw that in Argentina; where things were not out of control, but inflation has been running at around 25-30%,” explained Landers.
And there’s no reason to believe that anything would change under President Rousseff, said Landers. She has been accused of breaking the fiscal laws and overspending money that the government wasn’t allowed to spend, which eventually led to her impeachment. A decision whether she will step down is still pending.
“If we get to that point there’s really no way for her to come back into presidency,” said Landers.
What will follow is a new, much more market friendly president and a much more streamlined government – thus reducing costs, believes Landers. He would also likely implement social policy reforms.
No matter what happens with the president post, this will be a tough year, in Landers view, with negative GDP, but political change would create a better backdrop for 2017.
“All four [political parties] agree that it needs to get done, but in February there was no climate to even start discussing that,” said Landers. “So I think they realise that they have a ticking bomb in their hands and they need to move on it. If not now, then when?”
There are ways [Brazil’s political leadership] could gain public support that aren’t that expensive, noted Landers: “Fear mongers that say they will get rid of social programmes and things like that – its not true.
“They’ve seen the numbers and clearly things are not working right now. If there’s no correction on the fiscal side to get back to fiscal responsibility, then Brazil is going to continue to get downgraded and they will all be voted out of office in the next elections.”
