Dilma Rousseff re-elected president of Brazil amid economic slowdown

President Dilma Rousseff was re-elected in a second-round vote on Sunday October 26 for a new four-year term in Brazil’s tightest presidential election ever.

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Rousseff, of the Worker's Party, had 51.64% of the votes counted, while Party of the Brazilian Social-Democracy’s Aécio Neves came in second with 48.36%.

“We do not expect a significant improvement in economic growth in the near term, and actually forecast some deterioration in labour market conditions, as a falling participation rate will no longer be able to offset the decline in job creation, paving the way for an increase in unemployment,” Deutsche Bank chief economist José Carlos Faria said.

The main question regarding Rousseff’s second term remains whether the disappointing economic results of the policies implemented in her first term and very difficult re-election will prompt the president to change her economic policies, he said.

“Or whether Rousseff’s actions will be consistent with the rhetoric of an intense campaign that vehemently denied any wrong choices and attributed the ongoing economic malaise to global economic problems,” Faria added.

While HSBC Global Research analysts’ baseline scenario is that economic constraints would lead Rousseff´s administration to make some changes to economic policy, the current political situation may make it more challenging for the government to deliver macro-economic adjustments.

“We believe the most urgent item in the post-election agenda is to address the issue of fiscal slippage and transparency,” HSBC said.

Since President Rousseff has already indicated that the current finance minister, Guido Mantega, will be replaced, the bank expects investors to be also looking at policymaker appointments for a signal of the government’s intentions.

The Brazilian steel institute, IABr, said recently that it expects the country’s next federal government to carry out reforms to increase the industry’s competitiveness and to help reverse the current tough market conditions.



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