Economic Plight, Corruption and Unrest in Brazil

Since the impeachment of former president, Dilma Rousseff, in August 2016, President Michel Temer’s administration has been beleaguered by multiple corruption scandals uncovered by the Lava Jato (‘Operation Carwash’) investigators. By the end of 2016, Temer’s approval ratings had fallen to 13 percent, 63 percent of Brazilians were calling for new elections, and six of his ministers had resigned. Some of his key political allies in both the Chamber of Deputies and the Senate have also been arrested, or are under investigation. In particular, the arrest of Eduardo Cunha, the former President of the Chamber of Deputies and chief instigator of Rousseff’s impeachment, has been a significant setback for Temer’s government. The subsequent resignation of Renan Calheiros, President of the Senate, and key Temer ally, amid another corruption scandal was a further blow to the government. Amid these widening corruption scandals, Temer is expected to face growing calls for his impeachment in 2017. 

Temer’s administration is also expected to face significant economic hurdles this year. Economists reduced their growth forecasts for Brazil’s economy eight times in 2016, and unemployment hit an all-time high of 11.8 percent. Austerity proposals to freeze public spending increases for the next 20 years have therefore been a bitter pill to swallow for many Brazilians. Widespread opposition to anti-austerity measures and government corruption had seen large and violent protests in major cities, particularly in Rio de Janeiro, São Paulo and Brasília. Furthermore, workers’ unions, including those representing miners and port sector employees, have threatened to stage mass general strikes to oppose austerity measures, a move which could potentially bring the economy to a standstill. 

Many fear that 2017 could be another lost year for Brazil, and voters and politicians are already looking forward to the October 2018 elections for fundamental political change. Despite widening corruption scandals, Temer’s government remains intact, at least for now. However, there are already rumours that his allies in Congress are losing patience. Any further evidence directly linking Temer to the Petrobras corruption scandal, or continued economic stagnation, could push his allies to jump ship, likely resulting in early presidential elections.