The Week Ahead in Brazil #107

1. Politics – Former Brazilian President Luiz Inácio Lula da Silva tested positive for Covid-19 on Sunday (5). He will remain isolated for the week.

President Jair Bolsonaro criticised the press and the Federal Supreme Court on Tuesday (7). He travelled to Los Angeles on Thursday (9) to attend the Summit of the Americas and hold a bilateral meeting with US President Joe Biden. (CNN)

PSDB formalised its support for Senator Simone Tebet as a pre-candidate to the Presidency. PSDB will indicate someone from the party as the running mate for the vice-presidency. For now, discussions are stronger around Senator Tasso Jereissati (PSDB-CE).

President Jair Bolsonaro (PL) has decided to appoint senator Carlos Portinho (PL-RJ) to the government leadership in the Senate, a post that has been vacant since December last year. (Folha)

Quaest’s survey, released on Wednesday (9), shows Luiz Inácio Lula da Silva (PT) leading the presidential elections with 46% (stable) of voting intentions in the first round, and Jair Bolsonaro (PL) with 30% (+1 percentage point). The government is evaluated negatively by 47% (+1pp) of the population, and 25% (stable) consider the government positive.

The survey was conducted face-to-face with 2,000 voters between June 2 and 5.

PoderData also released a survey conducted with 3,000 voters, between June 5 and 7, by telephone. The survey shows Lula with 43% (stable), followed by Bolsonaro with 35% (stable). The government is disapproved by 52% (-2pp) and approved by 37% (-1pp). (Poder360)

Here’s a summary of the major electoral polls:

2. Economy – Brazil registered almost 197,000 new jobs in April 2022. The result was an increase of 120% compared to the same month of 2021, when 89,500 new jobs were created. (Brasil)

Brazil’s inflation slowed to 0.47% in May. The result was the lowest increase for the month since April 2021, when the IPCA (National Wide Consumer Price Index) rose 0.31%. The result was below financial market expectations. In 12 months, the IPCA reached 11.73% in May. (Valor)

Eletrobras finalized the capitalization process on Thursday (9) and will thus be privatized. The price per share was set at R$42. Around 350,000 workers used resources from the FGTS (Employees Severance Indemnity Fund) to invest in the shares, which will be traded starting Monday (13) on B3. (O Globo)

3. Public management – The Brazilian Central Bank’s public servants remains on strike since May 3. They rejected BCB’s proposal to increase the paychecks by 5%.

The Federal Supreme Court (STF) overturned the decision that gave back the mandate to Fernando Francischini (União Brasil-PR) on Tuesday (7). Francischini lost its mandate as a state lawmaker by a ruling of the Superior Electoral Court (TSE), as a consequence of propelling fake news. Last week, Justice Nunes Marques had nullified the TSE’s decision paving the way for Francischini to resume his mandate.

An analysis:

1. The political trend next week remains positive, but on the verge of reaching neutrality. Although the level of institutional conflict started the week high, between Thursday and Friday it decreased. In the US, Bolsonaro adopted a more moderate tone. The presidential coalition continues to show signs of cohesion and there were no significant changes in the levels of support for the government. The electoral polls continue to show no major variations.

Two important points for politics in the coming week. The first is about the elections. Bolsonaro seems to have felt the knock in the polls and is looking for ways out of the doldrums. Apparently, much of this stagnation stems from the state of the economy, but another part may also derive from the political instability that Bolsonaro causes by calling the electoral system into question or by attacking the judiciary. Some analysts say it was from this frustration with the polls, both public ones and those commissioned by his political group, that a more angry Bolsonaro came out this week. In addition, the PSDB’s alliance with the MDB may alter the balance between Lula and Bolsonaro, but the expectation that this will happen is still low.

The second relevant aspect for politics is how the Legislative will move forward regarding the presidential vetoes and regarding PLP 18/2022. Doubts have arisen in relation to the validity of the measure under the electoral law perspective. The forwarding of these two issues may give clearer signs of how deputies and senators are perceiving Bolsonaro’s expectations of victory.

2. In the economy, the trend in the economy remains positive for the next week. Inflation remains high, but with a tendency to decrease with good numbers. The government continues to seek a solution to the fuel issue. The result of jobs created was also positive.

The privatization of Eletrobras, an important achievement for the government, deserves to be highlighted, and should encourage future actions. Government appointments to the Petrobras board brought important names into the economic and financial decision-making process, such as Ricardo Soriano, Attorney General of the National Treasury (PGFN).

Next week, the Brazilian Central Bank will announce its decision on Wednesday. Financial market analyses point to an increase of 0.5 pp to 13.25% per year.

3. The trend in public administration has turned negative. The government has suffered strong criticism, domestically and internationally, on the issue of the environment and on the disappearance of the British journalist Dom Phillips and the indigenous activist Bruno Pereira, who disappeared in Vale do Javari, in Amazonas, since Sunday (5). The response has been slow and fragmented. The government’s communication on the case has also been poor.

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