QUITO, ECUADOR – The Brazilian economy isn’t looking great these days. The country is facing one of its most severe economic crises since the Great Depression, with unemployment at almost 12 per cent and inflation hovering around 8 per cent. The scene has caused a lot of anger, resentment and suffering across the country.
But Brazilians are about to get yet another shock, since the new President Michel Temer has chosen to respond to the country’s economic troubles with a series of neoliberal measures that include cutting funds to social programmes, healthcare and education – which many Brazilians have come to rely on.
Temer took office this summer after former President Dilma Rousseff was impeached for manipulating budget numbers. The move booted the left-wing Workers’ Party (PT) government from power for the first time in over 12 years. Temer then proceeded to load his cabinet with unelected officials and allies of his Brazilian Social Democratic Party government.
To unpack some of the implications of a floundering economy and new neoliberal policies, New Internationalist spoke with Brazilian political scientist Sergio Gregorio Baierle. Baierle previously worked with the Central Bank of Brazil and advocated for Participatory Budgeting with the NGO Cidade in Porto Alegre.
Brazil’s economy is in one of its worst recession its been in since the 1930s, while President Temer also announced last week that the economy isn’t expected to emerge from recession until the second half of next year – which is also later than expected. How is this actually unfolding in Brazil itself? How is it affecting people right now in the country?
The situation is awful – the situation for the poor but even for middle classes. It’s very difficult because the economy is not recovering.
For example, this year they [the government] have been able to produce some primary surplus for only two months of the year. They have not been able to achieve any primary surplus for the remaining months, so the debt with the banks is increasing, despite all this speech that there is a new hope for the economy and that many investors are trying to come to Brazil.
But what are investors actually doing? They are profiting off of the highest interest rate in the world. So, for example a debt in credit card costs you around 500 per cent a year. It’s unbelievable.