by Thomas Wash
On October 7th, Jair Bolsonaro, a far-right populist, made it out of the first round of presidential elections in Brazil in decisive fashion. A controversial figure within his country, Bolsonaro was able to build his popularity on the growing distrust of the government. Rising crime, corruption scandals and a record-breaking recession have led the public to push for an end to the current three-party coalition’s dominance in government. Bolsonaro’s off-the-cuff remarks, although sometimes considered offensive, have helped him form an image as being relatable to the common Brazilian. His political opponent, Fernando Haddad of the Workers’ Party, has struggled to gain support in light of the corruption scandals that plague his party. As a result, Bolsonaro has a commanding lead in the polls going into the second round of run-off elections. Barring a major upset, Bolsonaro is poised to win the October 28th presidential election.
Brazilian equities jumped following the results of the first round of elections. The rise can be attributed to the anticipated removal of the Workers’ Party from office as opposed to approval of Bolsonaro. Furthermore, the reputation of the Workers’ Party for overspending and mismanaging Brazil’s economy has deterred voters. Rising scandals have only added to those woes as its party leader, Dilma Rousseff, was impeached from the presidency and its original presidential candidate, Luiz Inácio Lula da Silva, was convicted and jailed on corruption charges. However, it appears that markets may be willing to give Bolsonaro a chance. He has admitted he does not know much about economics but says he is willing to allow his economic advisors to guide his policies.
Despite being the largest economy in South America, Brazil has a turbulent economic history. Blessed to be rich in commodities, Brazil’s reliance on commodity exports has left it vulnerable to boom and bust cycles. As a result of the fluctuations in its economy, the public has experimented with different political regimes and schools of economic thought. In Part I of this report, we will give a brief summary of Brazil’s history, from its time as a Portuguese colony to what it has become today. The report will be broken into three periods, the first will discuss Brazil’s time as a colony, then Brazil as a military dictatorship and finally present-day Brazil as a republic.