Adios Dilma, Hello Economy!
Brazil has a new president and the economy is now what everybody is talking about, as Simon Romero reports:
The biggest challenge facing Mr. Temer, who largely operated in the shadows as Ms. Rousseff’s vice president before breaking with her earlier this year, is evident: the economy.
Brazil’s gross domestic product has plunged 9.7 percent on a per-capita basis in the last nine quarters. The downturn, which Goldman Sachs likens to a depression, has even exceeded the 7.6 percent decline during the so-called lost decade of the 1980s, when Brazil fought hyperinflation.
Broad swaths of the population are angry with the entire political establishment, especially now that unemployment has surged to 11.6 percent, from 6.5 percent at the end of 2014. More than 1.7 million Brazilians have lost their jobs in the last year while politicians like Mr. Temer have been battling for power.
New president Michel Temer has his own ethical challenges, too. He does have a window of opportunity to win some goodwill from a nation tired of scandals. At the same time, the challenges facing Brazil are more than just economic cycles or a drop in prices for Brazilian commodities such as oil, iron ore and soya.
There is a lot more that Mr. Temer will have to tackle than a very bad case of crony capitalism, as Lauren Weiner wrote:
The country’s economic difficulties and its racial and social stratification rest upon a flawed foundation that can be summed up in a phrase he uses: “state capitalism.” The entwining of political power with economic power is an ill against which every modern democracy fights. Brazilians, though, have not waged the fight effectively.
So time will tell whether Mr. Temer is Pinochet, the man who saved Chile, or Gorbachev, the man who tried to reform communism. Brazil could really use a version of Pinochet and those Chicago boys. Otherwise, Mr. Temer’s presidency will be short and very difficult.