Bolsonaro and the course of a key partner for Argentina

Hundreds of theories have been intertwined during the last month to try to explain the election victory of Jair Bolsonaro in the presidential elections in Brazil. A former military man who aspires to claim the dictatorship, said homophobic and sexist, admirer of Donald Trump and with a strong inclination to xenophobia.

The question that has fed for a few days political, political and journalists who for years have shown Latin American progressivism, what are the causes that explain the rise of a character of such qualities?

It's hard to say, find a unique and finished answer. It is obvious to underline that the normal democratic process of the neighboring country was interrupted by the impeachment of the former president Dilma Rousseff, who was fired in 2016 for acts of corruption in a trial conducted by judges and legislators accused of causes of worse corruption than those that caused firing.

A second element, not less important, is the prohibition of the politician with the greatest intention to vote in Brazil, the former president Inácio Lula Da Silva, imprisoned for a cause of corruption and disqualified from participation in the elections just before the election . Even so, it is difficult to understand why the flow of votes of Lula failed to distort the course of the elections in favor of their candidate, to avoid the profound liberal ideological prejudices of Bolsonaro.

A third theory holds that the triumph of Bolsonaro obeys the society of the former army captain with the universal Church, which has enormous economic and political power in the neighboring country, where for years it has had its own blockade Congress. The subject, however, is not enough even alone. If the power of a single organization was sufficient to win an election, the question is why such an organization did not prevent the progress of the PT in advance. Social reading, rather, allows us to notice a certain social satiety for the breakthrough of progressivism on the continent.

For now, the taking of Bolsonaro is imminent, and before this scenario it is good to know the economic data of the receiving country, the possible dynamics that will arrive in the bilateral relationship with Argentina.


The combination of political crisis and recession was one of the characteristics that brought Brazil to where it is today. Neither the management of the PT inherited from Dilma, nor the government of Temer, have managed to straighten the ship of the economy, which shows negative data at least since 2014.

A recent report by the consulting firm Macroview, reveals the most important data of the Brazilian economy in the last four years, which allows to draw a parallel with the situation that in the same period has crossed Argentina.

A first glance shows that in the last four years the gross domestic product (GDP) has contracted 18%. A phenomenal fall in one of the countries that until the last decade has been designated as one of the most dynamic emerging globally. The sequence can be seen in the first graph that accompanies the note. It shows the evolution of GDP per capita with base 100 in 2013. The indicator that is usually used to analyze growth and distribution, has fallen by almost 9 points between 2013 and 2016, to recover marginally in the last two years. The liberal and liberal turnaround that Temer sought to give the economy after Dilma's departure did not reach a rebound in the level of activity.

Despite this, the second significant fact is that, unlike what happens in Argentina, the neighboring country has managed to turn the recession into an adequate control of the price level. Observing the dynamics of inflation, it has been maintained with single-digit figures in four of the last five years, and shows a significant decline from 10% in 2015 to 4% today.

In this sense, a third element is fundamental in Brazilian economic policy, and it is the reduction of the fiscal deficit implemented by the Temer government. The third chart shows the growth of financial tax red as a percentage of GDP during the last stretch of the Dilma government and the sharp decline since 2016.

The last fact that describes the Brazilian economic situation is the significant reduction in the current account deficit as a percentage of GDP, which has taken place since 2014. In this respect, a fact not less important, is that the Brazilian public debt is practically in its entirety named in reais. The total stock of public debt in dollars amounts to only 40,000 million dollars.

Argentina and what is coming

Although the history of Argentina and Brazil was historically linked to culture, idiosyncrasy and politics, at least three decades ago everything that happens in Brazil has a direct impact on our country, mainly in the economic area.

A priori, the pillars that drive the economic thought of Bolsonaro are very similar to those that the president Macri always exercised from the rhetoric. That is to say, to achieve greater integration of Brazil in the world, to deregulate markets and to reduce state interference in the economy, and to pursue a profound reform of the state that includes the issue of pensions and the reduction of taxes. With a mixture of luck, the Argentine president proposed a program very similar to his arrival in power. Of course, success depends on multiple factors, including the initial economic situation, the social ceiling to accept this type of measure and the balance of power in political terms. As for the latter, the most important fact is that Bolsonaro will not have a parliamentary majority and will be forced to reach agreements to implement deep reforms.

The most critical point, however, is to know the orientation of the Bolsonaro government in relation to Mercosur and Argentina. Paulo Guedes, who is taking shape as the future finance minister, said last week that "Mercosur will not be a priority for the new government". The economist holds an investment fund and holds a doctorate in economics from the University of Chicago, which will undoubtedly give Brazil's economic management a strong monetarist bias.

According to the Macroview report, based on the words of the future official, it is very likely that the Brazilian strategy consists in proposing that Mercosur move from being a "customs union" where there is a common import tariff outside the block, for being a "free trade zone", which includes only zero tariffs within the block, but allows countries to independently start bilateral negotiations with countries outside the bloc. If the forecast were met, this would lead to a weakening of the block in the first place and, secondly, that Argentina would no longer be a priority for Brazilian imports. In this context, a dynamic of expansion of economic activity in Brazil would not have the rebound that he knew he had in other times in Argentina.

What the Brazilian gross domestic product has collapsed in real terms between 2013 and 2018.

The financial fiscal deficit of Brazil, as a percentage of GDP.

Inflation in the neighboring country in 2018. In just one of the last 15 years, inflation registered a double-digit sign (10.7% in 2015).


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