In the 2018 presidential election campaign, Brazilian markets saw their favored mainstream right and center-right candidates fall far by the wayside. The choice that remained was between Fernando Haddad of the center-left Workers’ Party and the outsider Jair Bolsonaro — who, crucially, had Chicago School economist Paulo Guedes in tow as his future finance tsar.
Promises of an ultra-liberal agenda and myriad privatizations made the decision fairly straightforward for the markets, which helped push Messrs. Bolsonaro and Guedes over the finish line. But the government has delivered very little and has been a source of instability for the Brazilian economy.
So what keeps market agents from turning on Bolsonaro?
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- Carlos Goes is the Chief Research Officer of Instituto Mercado Popular, a São Paulo-based think tank. He has previously worked as Senior Economic Advisor for the Brazilian president’s office and as a researcher at the International Monetary Fund, the World Trade Organization, and U.S.-based think tanks.
- Financial analysts are becoming even more skeptical of the Bolsonaro government amid a series of crises, but have stopped short of abandoning the president before next year’s election.
- The Brazilian president wants to implement a series of stimulus measures ahead of the 2022 election, but these could breach federal spending caps. After his failed uprising on September 7, Mr. Bolsonaro has ramped up economic populism as a way to boost his popularity.
- Reporter Maria Martha Bruno explained why Brazilian big business was fond of Jair Bolsonaro back in 2018. After his win, however, researchers Marcus Gomes, Heike Doering, and Glenn Morgan argued that business elites would regret their decision to support the far-right candidate.
- A recent study shows how economic shocks caused by import tariff cuts in the 1990s are linked to the rise of populism in Brazil — both from the left and the right.
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