Half Empty, Half Full

This Wednesday a conference on projections for 2016 took place at SECOVI Real Estate Union in São Paulo. The tone of the presentations did not differ from the reigning mood in the Brazilian society these days in view of gloomy prospects in the short term.

The makings of the current crisis are at this point widely known. In a nutshell, having benefitted from favorable circumstances in the world economy for a long time, the Lula and Rousseff administrations nevertheless failed to promote growth sustainability through the necessary investments in infrastructure, technology and productivity.

Worse yet, in the past few years interest rates, fuel and electricity prices were all kept arbitrarily low. In the meantime government expenditure never ceased to increase, contributing for the creation of a serious fiscal imbalance.  That added to the aggravation of the government-owned Petrobras oil company’s hardship, contaminated as it was by mismanagement and corruption.

Almost a year into its second term in office, the government has been consistently losing support in Congress. Necessary laws to salvage its accounts from turmoil failed to obtain approval from the parliament. According to today’s speaker former Central Bank president Affonso Celso Pastore, although Brazil’s foreign trade balance has lately been improving, “there will be no solution without budget cuts and reforms”.

It is clear to see that such state of affairs can only deepen the crisis and delay the recovery from it. Bad news for most local entrepreneurs and workers, but not necessarily so for foreign investors since Brazil is temporarily on sale. Things are bound to worsen before they get better again – which will happen sooner or later.

Yet as Executive and Legislative clash, the Judiciary takes the lead. Investigations on the corruption-linked scandals at government-owned Petrobras oil company keep producing arrests and sentences against those responsible for some of the largest contractors in the country as well as implicated party officials and – lately – even previously unsuspected congressmen. Others may follow soon.

For another speaker, political correspondent Eliane Castanhede, not all is lost though. “The half empty glass is also half full”, she says. In the midst of this huge ethical and moral crisis, “something is changing in this country, perhaps the construction of a new sense of citizenship”. Now that is good news for everyone.